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 12, 2011

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.)

Post Office Box 1988

1400 31st Avenue SW, Suite 60

Minot, ND 58702-1988

(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, 2011 (Part II, Items 6, 7 and 8, respectively).  Historical information was updated solely for discontinued operations and to exclude impairment charges for all periods presented from the Company’s calculation of Fund From Operations (FFO), in accordance with recent guidance from the National Association of Real Estate Investment Trusts (“NAREIT”).  No sections of the 2011 Form 10-K other than those identified above are being updated by this filing.  Information in the 2011 Form 10-K is generally stated as of April 30, 2011, and this filing does not reflect any subsequent information or events other than the updating of historical information for discontinued operations and to exclude impairment charges for all periods presented from the calculation of FFO.  Without limiting the foregoing, this filing does not purport to update Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in the 2011 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 2011 Form 10-K, the Company’s Quarterly Reports on Form 10-Q for the quarterly periods ended July 31, 2011 and October 31, 2011 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 2012 the Company sold a retail property in Livingston, Montana.

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, 2011, that was filed with the Securities and Exchange Commission on December 12, 2011.

Under SEC regulations, the same discontinued classification is also required for previously-issued financial statements for each of the years presented in our 2011 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.

NAREIT recently clarified its definition of FFO to require the exclusion of impairment charges for all periods presented (that is, to add impairment charges back to net income in calculating FFO).  In its guidance, NAREIT noted its expectation that companies which had previously included impairment write-downs of depreciable real estate in FFO calculated in accordance with the NAREIT definition, would now restate reported FFO in order to provide a consistent and comparable presentation of FFO.  The Company included impairment charges in its calculation of FFO in fiscal years 2010 and 2009.  The Company has revised its calculation of FFO for these fiscal years to exclude impairment charges, in accordance with the recent NAREIT guidance.

FFO is widely used by real estate investment trusts as a primary performance metric, but it is a non-GAAP financial measure, and should not be considered as an alternative to net income as determined in accordance with GAAP.  The Company reconciles FFO to net income in its filings with the Securities and Exchange Commission.

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, 2011 recast for discontinued operations and to exclude impairment charges for all periods presented from the calculation of FFO, for the fiscal years ended April 30, 2011, 2010 and 2009 (and 2008 and 2007 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
101	The Company's Form 8-K updating its Annual Report on Form 10-K for the year ended April 30, 2011, formatted in XBRL (Extensible Business Reporting Language): (1) the Consolidated Balance Sheets, (2) the Consolidated Statements of Operations, (3) the Consolidated Statements of Equity (4) the Consolidated Statements of Cash Flows, and (5) Notes to Consolidated Financial Statements, tagged as blocks of text.

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 12, 2011

EX-23.1

EXHIBIT 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in Registration Statement Nos. 333-177143, 333-173568, 333-169710, 333-169205, 333-166162, 333-165977, 333-163267, 333-162349, 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, and 333-67317, on Form S-3 and in Registration Statement Nos. 333-173393, 333-140176 and 333-155497 on Form S-8 of our report, dated July 14, 2011 (December 12, 2011, 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 subsidiaries, 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 12, 2011

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 Exhibit 99.1.

	(in thousands, except per share data)
	2011			2010			2009			2008			2007
Consolidated Income Statement Data
Revenue	$	237,185		$	231,315		$	228,320		$	209,478		$	186,470
Gain on sale of real estate, land, and other investments	$	19,365		$	68		$	54		$	556		$	4,602
Income from continuing operations	$	4,391		$	5,155		$	10,388		$	14,459		$	14,335
Income (loss) from discontinued operations	$	19,960		$	(570	)	$	325		$	1,170		$	4,048
Net income	$	24,351		$	4,585		$	10,713		$	15,629		$	18,383
Net income attributable to noncontrolling interests – Operating Partnership	$	(4,449	)	$	(562	)	$	(2,227	)	$	(3,677	)	$	(4,299	)
Net income attributable to Investors Real Estate Trust	$	20,082		$	4,001		$	8,526		$	12,088		$	14,110
Consolidated Balance Sheet Data
Total real estate investments	$	1,458,245		$	1,500,889		$	1,472,575		$	1,456,178		$	1,316,534
Total assets	$	1,615,363		$	1,660,930		$	1,605,091		$	1,618,026		$	1,435,389
Mortgages payable	$	993,803		$	1,057,619		$	1,070,158		$	1,063,858		$	951,139
Revolving lines of credit	$	30,000		$	6,550		$	5,500		$	0		$	0
Total Investors Real Estate Trust shareholders’ equity	$	411,690		$	409,523		$	333,009		$	344,074		$	284,810
Consolidated Per Common Share Data (basic and diluted)
Income from continuing operations - Investors Real Estate Trust	$	.02		$	.04		$	.10		$	.17		$	.18
Income (loss) from discontinued operations - Investors Real Estate Trust	$	.20		$	(.01	)	$	.01		$	.01		$	.06
Net income	$	.22		$	.03		$	.11		$	.18		$	.24
Distributions	$	.69		$	.68		$	.68		$	.67		$	.66

CALENDAR YEAR	2010			2009			2008			2007			2006
Tax status of distributions
Capital gain		0.00	%		0.09	%		0.00	%		1.49	%		1.22	%
Ordinary income		28.53	%		39.17	%		53.43	%		51.69	%		42.01	%
Return of capital		71.47	%		60.74	%		46.57	%		46.82	%		56.77	%

For the fiscal year ended April 30, 2011, IRET recognized approximately $25.7 million of net capital gain for federal income tax purposes. IRET designates the entire $25.7 million of net capital gain as capital gain dividends.

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 elsewhere in this report. We operate on a fiscal year ending on April 30. The following discussion and analysis is for the fiscal year ended April 30, 2011.

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, 2011, our real estate portfolio consisted of 78 multi-family residential properties containing 8,661 apartment units and having a total real estate investment amount net of accumulated depreciation of $367.1 million, and 176 commercial properties containing approximately 12.2 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:

• 68 commercial office properties containing approximately 5.1 million square feet of leasable space and having a total real estate investment amount net of accumulated depreciation of $490.8 million;

• 56 commercial medical properties (including senior housing) containing approximately 2.7 million square feet of leasable space and having a total real estate investment amount net of accumulated depreciation of $382.5 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 $99.9 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 $101.5 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 $5.9 million to $237.2 million in fiscal year 2011, compared to $231.3 million in fiscal year 2010.  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, 2011 lowered our operating revenues by approximately $4.5 million, compared to $2.4 million for fiscal year 2010.  Expenses increased during fiscal year 2011, with utilities, maintenance, real estate taxes, 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 86.1% in fiscal year 2011 from 87.6% in fiscal year 2010.  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 increased to 92.8% in fiscal year 2011 on an all-property basis, from 89.7% in fiscal year 2010.

As our physical occupancy levels demonstrate, we continued to experience a challenging market environment in our commercial office, industrial and retail segments.  While many of our markets appear to be emerging from recession, growth remains sluggish and unemployment high, and we continue to find it challenging to lease vacant space.  We expect these leasing challenges to continue during fiscal year 2012, with correspondingly flat or modest growth in rental revenues and net operating income.   Our commercial medical segment continued to show strengthening results, and remains the best performing segment in our overall commercial portfolio, with strong real estate revenue and net operating income results.

2011 Annual Report 2

Our multi-family residential properties have shown steady improvement in occupancy and real estate revenue over the past several quarters.  We believe we are seeing positive results from our internal property management initiative, in terms of our ability to focus on increasing net operating income by improving occupancy, maintaining  control of expenses and establishing  direct relationships with our residents.  In some markets we are experiencing sufficient improvement in market fundamentals (i.e., a better balance of supply of available units with demand for those units) to permit us to raise rents.  While we expect to see continued favorable results in our multi-family segment in fiscal year 2012, our ability to maintain occupancy levels and selectively raise rents is dependent on continued economic recovery and employment growth, and the strength and sustainability of a recovery is currently still uncertain.

While we plan to actively pursue property acquisitions and development projects throughout fiscal year 2012, which may provide future revenue and net operating income growth, in our experience potential acquisitions are fully priced, based on their current income, and accordingly we continue to find it challenging to identify in our markets accretive acquisitions that are attractively priced. 

During fiscal year 2011, our financing and refinancing efforts continued to make a solid contribution to our net income.  Our mortgage interest expense decreased approximately 4.0% over the year-earlier period, which translated into a reduction of approximately $2.6 million in mortgage interest expense.   Our overall weighted average interest rate on all outstanding mortgage debt (excluding our multi-bank line of credit and new loans for our Jamestown Mall and Trinity Hospital build-to-suit development projects, which are financed with Recovery Zone Facility Revenue Bonds) was 5.92% as of April 30, 2011, compared to 6.17% as of April 30, 2010.  In fiscal year 2012, we expect that capital accessed through cash-out refinancings of existing mortgage debt will be at lower levels than in fiscal year 2011, due to fewer mortgage loans scheduled for refinancing.  We continue to expect, however, based on recent experience, that we will be able successfully to refinance, on terms comparable to existing financings, those mortgage loans that are scheduled for refinancing.

Additional information and more detailed discussions of our fiscal year 2011 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 reference 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.

2011 Annual Report 3

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-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 because the expected undiscounted cash flows plus reversion are less than the asset’s carrying value, impairment is recorded 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 $317,000 as of April 30, 2011) 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 deferred rents receivable arising from the straight-lining of rents (approximately $996,000 as of April 30, 2011) and from mortgage loans (approximately $3,000 as of April 30, 2011). 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 of 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).

2011 Annual Report 4

• 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 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 years 2011 and 2010, the Company’s TRS had a net operating loss.  There were no income tax provisions or material deferred income tax items for our TRS for the fiscal years ended April 30, 2011 and 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 and that the Company’s tax and accounting positions do not change.  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 2011 were $237.2 million, compared to $231.3 million in fiscal year 2010 and $228.3 million in fiscal year 2009. Revenues during fiscal year 2011 were $5.9 million greater than revenues in fiscal year 2010 and revenues during fiscal year 2010 were $3.0 million greater than in fiscal year 2009.

For fiscal 2011, the increase in revenue of $5.9 million resulted from:

	(in thousands)
Rent in Fiscal 2011 from 10 properties acquired in fiscal year 2010 in excess of that received in 2010 from the same 10 properties	$	7,799
Rent from 8 properties acquired in fiscal year 2011		2,356
Decrease in rental income on stabilized properties due primarily to a decrease in occupancy		(4,285	)
	$	5,870

For fiscal 2010, the increase in revenue of $3.0 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		(3,482	)
	$	2,995

As illustrated above, the majority of the increase in our gross revenue for fiscal years 2011 and 2010 ($10.2 million and $6.5 million respectively) resulted from the addition of new real estate properties to the IRET Properties’ portfolio. Rental Revenue in fiscal years 2011 and 2010 from stabilized properties decreased $4.3 and $3.5 million, respectively. For the next 12 months, we continue to look to acquisitions and development of new properties and

2011 Annual Report 5

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 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. Consequently, there is ongoing uncertainty regarding our ability to identify acquisition targets 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 2011 of approximately $19.4 million. This compares to approximately $68,000 of gain on sale of real estate recognized in fiscal 2010 and approximately $54,000 recognized in fiscal 2009.  Properties sold in fiscal years 2011 and 2010 are detailed below in the section captioned “Property Dispositions.”

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 shareholders 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 2011, 2010 and 2009.  For a reconciliation of net operating income of reportable segments to net 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 for the entirety of the periods being compared, and, in the case of development or re-development properties, which have achieved a target level of occupancy.  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 assess 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, 2011	Multi-Family  Residential		Commercial Office		Commercial Medical		Commercial Industrial		Commercial Retail		All Segments
Real estate revenue	$	66,838	$	77,747	$	66,048	$	13,165	$	13,387	$	237,185
Real estate expenses
Utilities		6,479		7,515		3,359		389		496		18,238
Maintenance		10,755		11,430		4,581		765		1,709		29,240
Real estate taxes		6,537		13,894		5,726		2,607		2,088		30,852
Insurance		1,205		503		384		127		85		2,304
Property management		9,153		2,713		8,416		440		554		21,276
Total real estate expenses	$	34,129	$	36,055	$	22,466	$	4,328	$	4,932	$	101,910
Net operating income	$	32,709	$	41,692	$	43,582	$	8,837	$	8,455	$	135,275
Stabilized net operating income	$	32,467	$	41,187	$	39,518	$	8,216	$	8,267	$	129,655
Non-stabilized net operating income		242		505		4,064		621		188		5,620
Total net operating income	$	32,709	$	41,692	$	43,582	$	8,837	$	8,455	$	135,275

2011 Annual Report 6

	(in thousands)
Year Ended April 30, 2010	Multi-Family  Residential		Commercial Office			Commercial Medical		Commercial Industrial		Commercial Retail		All Segments
Real estate revenue	$	65,478	$	82,079		$	57,439	$	13,095	$	13,224	$	231,315
Real estate expenses
Utilities		6,303		7,188			2,937		185		488		17,101
Maintenance		9,549		11,127			4,210		738		1,348		26,972
Real estate taxes		6,316		14,150			5,046		2,550		2,148		30,210
Insurance		1,664		1,051			479		224		197		3,615
Property management		8,783		3,317			5,232		424		624		18,380
Total real estate expenses	$	32,615	$	36,833		$	17,904	$	4,121	$	4,805	$	96,278
Gain on involuntary conversion		1,660		0			0		0		0		1,660
Net operating income	$	34,523	$	45,246		$	39,535	$	8,974	$	8,419	$	136,697
Stabilized net operating income	$	34,474	$	45,304		$	38,524	$	8,767	$	8,419	$	135,488
Non-stabilized net operating income		49		(58	)		1,011		207		0		1,209
Total net operating income	$	34,523	$	45,246		$	39,535	$	8,974	$	8,419	$	136,697

	(in thousands)
Year Ended April 30, 2009	Multi-Family  Residential		Commercial Office		Commercial Medical		Commercial Industrial		Commercial Retail		All Segments
Real estate revenue	$	65,632	$	83,446	$	52,547	$	12,488	$	14,207	$	228,320
Real estate expenses
Utilities		6,861		7,851		2,859		93		448		18,112
Maintenance		9,084		11,287		4,046		566		1,448		26,431
Real estate taxes		6,654		13,850		4,515		1,878		2,180		29,077
Insurance		1,089		1,003		419		171		182		2,864
Property management		7,627		3,653		4,207		434		795		16,716
Total real estate expenses	$	31,315	$	37,644	$	16,046	$	3,142	$	5,053	$	93,200
Net operating income	$	34,317	$	45,802	$	36,501	$	9,346	$	9,154	$	135,120
Stabilized net operating income	$	33,356	$	45,713	$	35,929	$	9,228	$	9,154	$	133,380
Non-stabilized net operating income		961		89		572		118		0		1,740
Total net operating income	$	34,317	$	45,802	$	36,501	$	9,346	$	9,154	$	135,120

Changes in Expenses and Net Income

Net income available to common shareholders for fiscal year 2011 was $17.7 million, compared to $1.6 million in fiscal year 2010 and $6.2 million in fiscal year 2009. On a per common share basis, net income was $.22 per common share in fiscal year 2011, compared to $.03 per common share in fiscal year 2010 and $.11 in fiscal year 2009.

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

2011 Annual Report 7

Changes in net income available to common shareholders for fiscal year 2011 resulted from:

	(in thousands)
An increase in income from discontinued operations	$	20,530
A decrease in interest expense primarily due to debt refinancing		1,640
A decrease in impairment of real estate investment		708
An increase in net operating income (not including involuntary conversion)		238
An increase in net loss attributable to noncontrolling interests - consolidated real estate entities		202
These increases were offset by:
An increase in net income attributable to noncontrolling interests - Operating Partnership		(3,887	)
A decrease in gain on involuntary conversion		(1,660	)
An increase in depreciation/amortization expense related to real estate investments		(755	)
An increase in amortization related to non-real estate investments		(317	)
A decrease in interest income		(280	)
An increase in other expenses, administrative, advisory and trustee services		(265	)
A decrease in other income		(73	)
Total increase in fiscal 2011 net income available to common shareholders	$	16,081

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		(2,719	)
An increase in other expenses, administrative, advisory and trustee services		(2,409	)
An increase in loss from discontinued operations		(895	)
An increase in impairment of real estate investment		(708	)
An increase in interest expense primarily due to debt placed on new acquisitions		(653	)
An increase in amortization related to non-real estate investments		(302	)
A decrease in net operating income primarily due to vacancy on stabilized properties (not including involuntary conversion)		(83	)
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	)

Factors Impacting Net Income During Fiscal Year 2011 as Compared to Fiscal Year 2010

Physical occupancy rates in three of our five segments, on an all properties basis, decreased compared to the year-earlier period, while real estate revenue increased in four of our five segments in fiscal year 2011 compared to fiscal year 2010.  Net income available to common shareholders increased to $17.7 million in fiscal year 2011, compared to $1.6 million in fiscal year 2010.  Revenue increases during fiscal year 2011 were offset by increases in utilities, maintenance, real estate taxes and property management expense.

• Physical Occupancy.  During fiscal year 2011, physical occupancy levels at our properties on an all properties basis decreased over year-earlier levels in three of our five reportable segments (commercial office, commercial industrial and commercial retail), and increased in our multi-family residential and commercial medical segments.  Physical occupancy rates on a stabilized property basis for the fiscal year ended April 30, 2011 decreased in four of our five reportable segments compared to the fiscal year ended April 30, 2010, and are shown below:

2011 Annual Report 8

	Stabilized Properties						All Properties
	Fiscal Year Ended April 30,						Fiscal Year Ended April 30,
Segments	2011			2010			2011			2010
Multi-Family Residential		92.8	%		89.7	%		92.8	%		89.7	%
Commercial Office		79.2	%		83.9	%		79.7	%		83.4	%
Commercial Medical		95.3	%		95.7	%		96.0	%		95.1	%
Commercial Industrial		89.8	%		90.6	%		90.1	%		90.7	%
Commercial Retail		82.1	%		82.3	%		81.1	%		82.3	%

• Concessions.  Our overall level of tenant concessions increased for the fiscal year ended April 30, 2011 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, 2011 lowered our operating revenues by approximately $4.5 million, as compared to an approximately $2.4 million reduction in operating revenues attributable to rent concessions offered in fiscal year 2010.

The following table shows the approximate reduction in our operating revenues due to rent concessions, by segment, for the fiscal years ended April 30, 2011 and 2010:

	(in thousands)
	Fiscal Year Ended April 30,
	2011		2010		Change
Multi-Family Residential	$	1,539	$	1,152	$	387
Commercial Office(1)		2,081		747		1,334
Commercial Medical(1)		284		381		(97	)
Commercial Industrial(1)		389		99		290
Commercial Retail(1)		239		27		212
Total	$	4,532	$	2,406	$	2,126

(1)  Rent concessions are amortized on a straight-line basis over the terms of the related leases.

• Increased Depreciation Expense.  Depreciation expense increased in fiscal year 2011 compared to fiscal year 2010, from $54.6 million to $55.4 million, an increase of $828,000 or approximately 1.5%.  Depreciation expense at properties newly acquired in fiscal years 2011 and 2010 added $1.6 million to the depreciation expense category during fiscal year 2011 while depreciation expenses at existing properties decreased by $775,000.  Depreciation expense consists of depreciation on buildings and capital improvements, and does not include depreciation on property and equipment at the Company’s offices.  Depreciation for property and equipment at the Company’s offices was $425,000 for a total Depreciation/amortization related to real estate investments of $55.8 million for fiscal year 2011.

Depreciation expense by reportable segment for the fiscal years ended April 30, 2011 and 2010 is as follows:

	(in thousands)
	Multi-Family  Residential			Commercial  Office			Commercial  Medical			Commercial  Industrial			Commercial  Retail			All Segments
2011	$	13,604		$	19,882		$	15,630		$	3,317		$	2,951		$	55,384
2010	$	13,105		$	20,574		$	14,383		$	3,498		$	2,996		$	54,556
Change	$	499		$	(692	)	$	1,247		$	(181	)	$	(45	)	$	828
% change (2011 vs. 2010)		3.8	%		(3.4	%)		8.7	%		(5.2	%)		(1.5	%)		1.5	%
Stabilized	$	383		$	(945	)	$	223		$	(292	)	$	(144	)	$	(775	)
Non-stabilized	$	116		$	253		$	1,024		$	111		$	99		$	1,603
Change	$	499		$	(692	)	$	1,247		$	(181	)	$	(45	)	$	828

• Increased Utility Expense.  Utility expense totaled $18.2 million in fiscal year 2011, compared to $17.1 million in fiscal year 2010.  Utility expenses at properties newly acquired in fiscal years 2011 and 2010

2011 Annual Report 9

added $438,000 to the utility expense category during fiscal year 2011 (with our commercial medical segment accounting for $344,000), while utility expenses at existing properties increased by $699,000, primarily due to increased heating costs in fiscal year 2011 compared to fiscal year 2010, for a total increase of $1.1 million or 6.6% in utility expenses in fiscal year 2011 compared to fiscal year 2010.

Utility expenses by reportable segment for the fiscal years ended April 30, 2011 and 2010 are as follows:

	(in thousands)
	Multi-Family  Residential			Commercial  Office			Commercial  Medical			Commercial  Industrial			Commercial  Retail			All Segments
2011	$	6,479		$	7,515		$	3,359		$	389		$	496		$	18,238
2010	$	6,303		$	7,188		$	2,937		$	185		$	488		$	17,101
Change	$	176		$	327		$	422		$	204		$	8		$	1,137
% change (2011 vs. 2010)		2.8	%		4.5	%		14.4	%		110.3	%		1.6	%		6.6	%
Stabilized	$	119		$	290		$	78		$	204		$	8		$	699
Non-stabilized	$	57		$	37		$	344		$	0		$	0		$	438
Change	$	176		$	327		$	422		$	204		$	8		$	1,137

• Increased Maintenance Expense.  Maintenance expenses totaled $29.2 million in fiscal year 2011, compared to $27.0 million in fiscal year 2010.  Maintenance expenses at properties newly acquired in fiscal years 2011 and 2010 added approximately $368,000 to the maintenance expense category during fiscal year 2011, while maintenance expenses at existing properties increased by approximately $1.9 million, primarily for increased snow removal costs in all segments and for payroll and tax expenses at our multi-family residential segment resulting in a net increase of approximately $2.3 million or 8.4% in maintenance expenses in fiscal year 2011 compared to fiscal year 2010.  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, 2011 and 2010 are as follows:

	(in thousands)
	Multi-Family  Residential			Commercial  Office			Commercial  Medical			Commercial  Industrial			Commercial  Retail			All Segments
2011	$	10,755		$	11,430		$	4,581		$	765		$	1,709		$	29,240
2010	$	9,549		$	11,127		$	4,210		$	738		$	1,348		$	26,972
Change	$	1,206		$	303		$	371		$	27		$	361		$	2,268
% change (2011 vs. 2010)		12.6	%		2.7	%		8.8	%		3.7	%		26.8	%		8.4	%
Stabilized	$	1,086		$	229		$	209		$	23		$	353		$	1,900
Non-stabilized	$	120		$	74		$	162		$	4		$	8		$	368
Change	$	1,206		$	303		$	371		$	27		$	361		$	2,268

• Increased Real Estate Tax Expense.  Real estate taxes on properties newly acquired in fiscal years 2011 and 2010 added $264,000 to real estate tax expense, while real estate taxes on existing properties increased by approximately $378,000, for a total increase of $642,000 or 2.1% in real estate tax expense in fiscal year 2011 compared to fiscal year 2010, from $30.2 million to $30.9 million.  The increase in real estate taxes was a net result of increased assessed values in the multi-family residential and commercial medical segments offset by decreased assessed values in the commercial office and commercial retail segments.

2011 Annual Report 10

Real estate tax expense by reportable segment for the fiscal years ended April 30, 2011 and 2010 is as follows:

	(in thousands)
	Multi-Family  Residential			Commercial  Office			Commercial  Medical			Commercial  Industrial			Commercial  Retail			All Segments
2011	$	6,537		$	13,894		$	5,726		$	2,607		$	2,088		$	30,852
2010	$	6,316		$	14,150		$	5,046		$	2,550		$	2,148		$	30,210
Change	$	221		$	(256	)	$	680		$	57		$	(60	)	$	642
% change (2011 vs. 2010)		3.5	%		(1.8	%)		13.5	%		2.2	%		(2.8	%)		2.1	%
Stabilized	$	156		$	(349	)	$	636		$	28		$	(93	)	$	378
Non-stabilized	$	65		$	93		$	44		$	29		$	33		$	264
Change	$	221		$	(256	)	$	680		$	57		$	(60	)	$	642

• Decreased Insurance Expense.  Insurance expense decreased in fiscal year 2011 compared to fiscal year 2010, from $3.6 million to $2.3 million, a decrease of approximately 36.3%.  Insurance expense at properties newly-acquired in fiscal years 2011 and 2010 added approximately $187,000 to insurance expense, while insurance expense at existing properties decreased by approximately $1.5 million, for a decrease of approximately $1.3 million in insurance expense in fiscal year 2011 compared to fiscal year 2010.  The decrease in insurance expense at stabilized properties is due to reduced insurance rates because of better claims experience.

Insurance expense by reportable segment for the fiscal years ended April 30, 2011 and 2010 is as follows:

	(in thousands)
	Multi-Family  Residential			Commercial  Office			Commercial  Medical			Commercial  Industrial			Commercial  Retail			All Segments
2011	$	1,205		$	503		$	384		$	127		$	85		$	2,304
2010	$	1,664		$	1,051		$	479		$	224		$	197		$	3,615
Change	$	(459	)	$	(548	)	$	(95	)	$	(97	)	$	(112	)	$	(1,311	)
% change (2011 vs. 2010)		(27.6	%)		(52.1	%)		(19.8	%)		(43.3	%)		(56.9	%)		(36.3	%)
Stabilized	$	(469	)	$	(553	)	$	(267	)	$	(97	)	$	(112	)	$	(1,498	)
Non-stabilized	$	10		$	5		$	172		$	0		$	0		$	187
Change	$	(459	)	$	(548	)	$	(95	)	$	(97	)	$	(112	)	$	(1,311	)

• Increased Property Management Expense.  Property management expense increased in fiscal year 2011 compared to fiscal year 2010, from $18.4 million to $21.3 million, an increase of $2.9 million or approximately 15.8%.  Property management expenses at properties newly acquired in fiscal years 2011 and 2010 added $4.5 million to the property management category during fiscal year 2011 (with our commercial medical segment accounting for $4.4 million) while property management expenses at existing properties decreased by $1.6 million primarily as a result of a reduction in bad debt expense in the commercial medical segment of $1.0 million, offset by an increase in bad debt expense in the multi-family residential segment of $348,000 and to a lesser extent reduced management fees in the commercial office segment of $746,000.

2011 Annual Report 11

Property management expense by reportable segment for the fiscal years ended April 30, 2011 and 2010 is as follows:

	(in thousands)
	Multi-Family  Residential			Commercial  Office			Commercial  Medical			Commercial  Industrial			Commercial  Retail			All Segments
2011	$	9,153		$	2,713		$	8,416		$	440		$	554		$	21,276
2010	$	8,783		$	3,317		$	5,232		$	424		$	624		$	18,380
Change	$	370		$	(604	)	$	3,184		$	16		$	(70	)	$	2,896
% change (2011 vs. 2010)		4.2	%		(18.2	%)		60.9	%		3.8	%		(11.2	%)		15.8	%
Stabilized	$	275		$	(623	)	$	(1,175	)	$	9		$	(76	)	$	(1,590	)
Non-stabilized	$	95		$	19		$	4,359		$	7		$	6		$	4,486
Change	$	370		$	(604	)	$	3,184		$	16		$	(70	)	$	2,896

• Decreased Mortgage Interest Expense.  Our mortgage interest expense decreased approximately $2.5 million, or 4.0%, to approximately $61.1 million during fiscal year 2011, compared to $63.6 million in fiscal year 2010. The mortgage interest expense category does not include interest expense on the multi-bank line of credit we entered into in the first quarter of fiscal year 2011, which totaled approximately $851,000 in fiscal year 2011, or interest expense totaling approximately $96,000 in fiscal year 2011 on our two loans financed with Recovery Zone Facility Bonds.  Mortgage interest expense and interest expense on our line of credit and on our two loans financed with Recovery Zone Facility Bonds are all components of “Interest expense” on our consolidated statement of operations. Mortgage interest expense for properties newly acquired in fiscal years 2011 and 2010 added $321,000 to our total mortgage interest expense in fiscal year 2011, while mortgage interest expense on existing properties decreased $2.9 million.  Our overall weighted average interest rate on all outstanding mortgage debt was 5.92% as of April 30, 2011, compared to 6.17% as of April 30, 2010.  Our mortgage debt decreased approximately $63.8 million, or 6.0%, to approximately $993.8 million as of April 30, 2011, compared to April 30, 2010. Mortgage debt does not include our multi-bank line of credit and our two loans financed with Recovery Zone Facility Bonds, both of which appear on our consolidated balance sheet in “Other debt.”

Mortgage interest expense by reportable segment for the fiscal years ended April 30, 2011 and 2010 is as follows:

	(in thousands)
	Multi-Family  Residential			Commercial  Office			Commercial  Medical			Commercial  Industrial			Commercial  Retail			All Segments
2011	$	16,550		$	21,349		$	16,307		$	3,786		$	3,071		$	61,063
2010	$	16,540		$	22,864		$	17,023		$	3,884		$	3,308		$	63,619
Change	$	10		$	(1,515	)	$	(716	)	$	(98	)	$	(237	)	$	(2,556	)
% change (2011 vs. 2010)		0.1	%		(6.6	%)		(4.2	%)		(2.5	%)		(7.2	%)		(4.0	%)
Stabilized	$	(159	)	$	(1,608	)	$	(710	)	$	(163	)	$	(237	)	$	(2,877	)
Non-stabilized	$	169		$	93		$	(6	)	$	65		$	0		$	321
Change	$	10		$	(1,515	)	$	(716	)	$	(98	)	$	(237	)	$	(2,556	)

• 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 $7.1 million in fiscal year 2011, compared to $8.6 million in fiscal year 2010. The decrease in amortization expense in fiscal year 2011 compared to fiscal year 2010 was primarily due to prior years’ acquisitions becoming completely amortized.

• Increased Administrative expenses.  Administrative expenses totaled $6.6 million in fiscal year 2011, compared to $5.7 million in fiscal year 2010, with the increase due primarily to higher salary and employee incentive compensation expense.

2011 Annual Report 12

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:

	Stabilized Properties						All Properties
	Fiscal Year Ended April 30,						Fiscal Year Ended April 30,
Segments	2010			2009			2010			2009
Multi-Family Residential		89.6	%		93.6	%		89.7	%		93.4	%
Commercial Office		84.2	%		87.4	%		83.4	%		87.5	%
Commercial Medical		94.5	%		95.6	%		95.1	%		95.0	%
Commercial Industrial		90.3	%		96.9	%		90.7	%		97.0	%
Commercial Retail		82.3	%		84.2	%		82.3	%		84.2	%

• 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 and 2009 lowered our operating revenues by approximately $2.4 million.

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	$	1,152	$	1,085	$	67
Commercial Office		747		1,036		(289	)
Commercial Medical		381		34		347
Commercial Industrial		99		220		(121	)
Commercial Retail		27		44		(17	)
Total	$	2,406	$	2,419	$	(13	)

• Increased Depreciation Expense.  Depreciation expense increased in fiscal year 2010 compared to fiscal year 2009, from $52.0 million to $54.5 million, an increase of $2.5 million or approximately 4.8%.  Depreciation expense at properties newly acquired in fiscal years 2010 and 2009 added $1.3 million to the depreciation expense category during fiscal year 2010 while depreciation expenses at existing properties increased by $1.2 million.  Depreciation expense consists of depreciation on buildings and capital improvements, and does not include depreciation on property and equipment at the Company’s offices. Depreciation for property and equipment at the Company’s offices was $498,000 for a total Depreciation/amortization related to real estate investments of $55.1 million for fiscal year 2010.

2011 Annual Report 13

Depreciation 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	$	13,105		$	20,574		$	14,383		$	3,498		$	2,996		$	54,556
2009	$	12,076		$	20,760		$	13,109		$	3,368		$	2,727		$	52,040
Change	$	1,029		$	(186	)	$	1,274		$	130		$	269		$	2,516
% change (2010 vs. 2009)		8.5	%		(0.9	%)		9.7	%		3.9	%		9.9	%		4.8	%
Stabilized	$	697		$	(279	)	$	535		$	(16	)	$	269		$	1,206
Non-stabilized	$	332		$	93		$	739		$	146		$	0		$	1,310
2010	$	1,029		$	(186	)	$	1,274		$	130		$	269		$	2,516

• Decreased Utility Expense.  Utility expense totaled $17.1 million in fiscal year 2010, compared to $18.1 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 fiscal year 2009’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 $1.0 million or 5.6% 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	$	6,303		$	7,188		$	2,937		$	185		$	488		$	17,101
2009	$	6,861		$	7,851		$	2,859		$	93		$	448		$	18,112
Change	$	(558	)	$	(663	)	$	78		$	92		$	40		$	(1,011	)
% change (2010 vs. 2009)		(8.1	%)		(8.4	%)		2.7	%		98.9	%		8.9	%		(5.6	%)
Stabilized	$	(542	)	$	(682	)	$	(233	)	$	93		$	40		$	(1,324	)
Non-stabilized	$	(16	)	$	19		$	311		$	(1	)	$	0		$	313
Change	$	(558	)	$	(663	)	$	78		$	92		$	40		$	(1,011	)

• Increased Maintenance Expense.  Maintenance expenses totaled $27.0 million in fiscal year 2010, compared to $26.4 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 $120,000, primarily for payroll and taxes and vehicle expenses at our multi-family residential segment resulting in a net increase of approximately $541,000 million or 2.0% 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 costs must be collected from tenants in the form of general rent increases.

2011 Annual Report 14

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	$	9,549		$	11,127		$	4,210		$	738		$	1,348		$	26,972
2009	$	9,084		$	11,287		$	4,046		$	566		$	1,448		$	26,431
Change	$	465		$	(160	)	$	164		$	172		$	(100	)	$	541
% change (2010 vs. 2009)		5.1	%		(1.4	%)		4.1	%		30.4	%		(6.9	%)		2.0	%
Stabilized	$	324		$	(186	)	$	(90	)	$	172		$	(100	)	$	120
Non-stabilized	$	141		$	26		$	254		$	0		$	0		$	421
Change	$	465		$	(160	)	$	164		$	172		$	(100	)	$	541

• 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 $941,000, for a total increase of $1.1 million or 3.9% in real estate tax expense in fiscal year 2010 compared to fiscal year 2009, from $29.1 million to $30.2 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	$	6,316		$	14,150		$	5,046		$	2,550		$	2,148		$	30,210
2009	$	6,654		$	13,850		$	4,515		$	1,878		$	2,180		$	29,077
Change	$	(338	)	$	300		$	531		$	672		$	(32	)	$	1,133
% change (2010 vs. 2009)		(5.1	%)		2.2	%		11.8	%		35.8	%		(1.5	%)		3.9	%
Stabilized	$	(212	)	$	262		$	412		$	511		$	(32	)	$	941
Non-stabilized	$	(126	)	$	38		$	119		$	161		$	0		$	192
Change	$	(338	)	$	300		$	531		$	672		$	(32	)	$	1,133

• Increased Insurance Expense.  Insurance expense increased in fiscal year 2010 compared to fiscal year 2009, from $2.9 million to $3.6 million, an increase of approximately 26.2%.  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 $652,000, for an increase of approximately $751,000 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 $531,000.

2011 Annual Report 15

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	$	1,664		$	1,051		$	479		$	224		$	197		$	3,615
2009	$	1,089		$	1,003		$	419		$	171		$	182		$	2,864
Change	$	575		$	48		$	60		$	53		$	15		$	751
% change (2010 vs. 2009)		52.8	%		4.8	%		14.3	%		31.0	%		8.2	%		26.2	%
Stabilized	$	531		$	39		$	20		$	47		$	15		$	652
Non-stabilized	$	44		$	9		$	40		$	6		$	0		$	99
Change	$	575		$	48		$	60		$	53		$	15		$	751

• Increased Property Management Expense.  Property management expense increased in fiscal year 2010 compared to fiscal year 2009, from $16.7 million to $18.4 million, an increase of $1.7 million or approximately 10.0%.  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 $735,000 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:

	(in thousands)
	Multi-Family  Residential			Commercial  Office			Commercial  Medical			Commercial  Industrial			Commercial  Retail			All Segments
2010	$	8,783		$	3,317		$	5,232		$	424		$	624		$	18,380
2009	$	7,627		$	3,653		$	4,207		$	434		$	795		$	16,716
Change	$	1,156		$	(336	)	$	1,025		$	(10	)	$	(171	)	$	1,664
% change (2010 vs. 2009)		15.2	%		(9.2	%)		24.4	%		(2.3	%)		(21.5	%)		10.0	%
Stabilized	$	1,036		$	(362	)	$	(1,213	)	$	(25	)	$	(171	)	$	(735	)
Non-stabilized	$	120		$	26		$	2,238		$	15		$	0		$	2,399
Change	$	1,156		$	(336	)	$	1,025		$	(10	)	$	(171	)	$	1,664

• Decreased Mortgage Interest Expense.  Our mortgage interest expense decreased approximately $594,000, or 0.9%, to approximately $63.6 million during fiscal year 2010, compared to $64.2 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.

2011 Annual Report 16

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	$	16,540		$	22,864		$	17,023		$	3,884		$	3,308		$	63,619
2009	$	16,159		$	23,658		$	16,870		$	3,743		$	3,783		$	64,213
Change	$	381		$	(794	)	$	153		$	141		$	(475	)	$	(594	)
% change (2010 vs. 2009)		2.4	%		(3.4	%)		0.9	%		3.8	%		(12.6	%)		(0.9	%)
Stabilized	$	325		$	(794	)	$	(457	)	$	(80	)	$	(475	)	$	(1,481	)
Non-stabilized	$	56		$	0		$	610		$	221		$	0		$	887
Change	$	381		$	(794	)	$	153		$	141		$	(475	)	$	(594	)

• 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 becoming completely amortized.

• Increased Administrative expenses.  Administrative expenses totaled $5.7 million in fiscal year 2010, compared to $4.4 million in fiscal year 2009, with the increase due primarily to higher salary and employee incentive compensation expense associated with our internal property management initiative.

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	2011		%			2010		%			2009		%
Real Estate Investments – (cost before depreciation)
Multi-Family Residential	$	484,815		27.4	%	$	556,867		30.9	%	$	542,547		31.4	%
Commercial Office		595,491		33.6	%		582,943		32.4	%		571,565		33.0	%
Commercial Medical		447,831		25.3	%		430,229		23.9	%		388,219		22.4	%
Commercial Industrial		117,602		6.6	%		113,249		6.3	%		108,103		6.3	%
Commercial Retail		125,059		7.1	%		117,231		6.5	%		119,151		6.9	%
Total	$	1,770,798		100.0	%	$	1,800,519		100.0	%	$	1,729,585		100.0	%
Net Operating Income
Multi-Family Residential	$	32,709		24.2	%	$	34,523		25.3	%		34,317		25.4	%
Commercial Office		41,692		30.8	%		45,246		33.1	%		45,802		33.9	%
Commercial Medical		43,582		32.2	%		39,535		28.9	%		36,501		27.0	%
Commercial Industrial		8,837		6.5	%		8,974		6.6	%		9,346		6.9	%
Commercial Retail		8,455		6.3	%		8,419		6.1	%		9,154		6.8	%
Total	$	135,275		100.0	%	$	136,697		100.0	%	$	135,120		100.0	%

2011 Annual Report 17

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, 2011, for fiscal years 2012 through 2021, and the leases that will expire during fiscal year 2022 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
2012		1,991,437		19.1	%	$	16,234,582		13.3	%
2013		871,687		8.4	%		10,734,839		8.8	%
2014		1,355,201		13.0	%		17,219,669		14.1	%
2015		845,870		8.1	%		9,831,246		8.0	%
2016		1,354,079		13.0	%		13,754,067		11.3	%
2017		1,077,571		10.4	%		13,534,579		11.1	%
2018		317,263		3.1	%		5,328,258		4.4	%
2019		547,109		5.3	%		7,277,682		5.9	%
2020		327,955		3.2	%		4,261,677		3.5	%
2021		326,605		3.1	%		3,923,576		3.2	%
Thereafter		1,386,570		13.3	%		20,071,153		16.4	%
Totals		10,401,347		100.0	%	$	122,171,328		100.0	%

The following table lists our top ten commercial tenants on April 30, 2011, for all commercial properties owned by us, measured by percentage of total commercial segments’ minimum rents as of April 30, 2011.  Our results of operations are dependent on, among other factors, the economic health of our tenants. We attempt to mitigate tenant credit risk by working to secure creditworthy tenants that meet our underwriting criteria and monitoring our portfolio to identify potential problem tenants. We believe that our credit risk is also mitigated by the fact that no individual tenant accounts for more than approximately 10% of our total real estate rentals, although affiliated entities of Edgewood Vista together accounted for approximately 10.8% of our total commercial segments’ minimum rents as of April 30, 2011.

	(in thousands)
Lessee	% of Total Commercial  Segments Minimum Rents as of April 30, 2011
Affiliates of Edgewood Vista	10.8%
St. Lukes Hospital of Duluth, Inc.	3.5%
Fairview Health Services	3.1%
Applied Underwriters	2.3%
Affiliates of Siemens USA	2.1%
HealthEast Care System	1.7%
Microsoft (NASDAQ: MSFT)	1.4%
Smurfit - Stone Container (NASDAQ: SSCC)	1.4%
Nebraska Orthopaedic Hospital	1.3%
Arcadis Corporate Services, Inc.	1.2%
All Others	71.2%
Total Monthly Commercial Rent as of April 30, 2011	100.0%

Property Acquisitions

IRET Properties paid approximately $45.6 million for real estate properties addedto its portfolio during fiscal year 2011, compared to $55.4 million in fiscal year 2010. The fiscal year 2011 and 2010 additions are detailed below.

2011 Annual Report 18

Fiscal 2011 (May 1, 2010 to April 30, 2011)

	(in thousands)
Acquisitions	Land		Building		Intangible Assets		Acquisition Cost
Multi-Family Residential
24 unit - North Pointe 2 - Bismarck, ND	$	159	$	1,713	$	0	$	1,872
44 unit - Sierra Vista - Sioux Falls, SD		241		2,097		0		2,338
		400		3,810		0		4,210
Commercial Office
58,574 sq. ft. Omaha 10802 Farnam Dr - Omaha, NE		2,462		4,374		1,459		8,295
Commercial Medical
14,705 sq. ft. Billings 2300 Grant Road - Billings, MT		649		1,216		657		2,522
14,640 sq. ft. Missoula 3050 Great Northern - Missoula, MT		640		1,331		752		2,723
108,503 sq. ft. Edgewood Vista Minot - Minot, ND		1,046		11,590		2,545		15,181
23,965 sq. ft. Edgewood Vista Spearfish Expansion - Spearfish, SD1		0		2,777		0		2,777
		2,335		16,914		3,954		23,203
Commercial Industrial
42,244 sq. ft. Fargo 1320 45th St N - Fargo, ND2		0		1,634		0		1,634
Commercial Retail
47,709 sq. ft. Minot 1400 31st Ave - Minot, ND		1,026		6,143		1,081		8,250
Total Property Acquisitions	$	6,223	$	32,875	$	6,494	$	45,592

(1) Expansion project placed in service January 10, 2011. Approximately $497,000 of this cost was incurred in the three months ended April 30, 2011.

(2) Development property placed in service June 22, 2010. Additional costs incurred in fiscal year 2010 totaled $2.3 million, for a total project cost at April 30, 2011 of $3.9 million.

2011 Annual Report 19

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
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
Unimproved Land
Fargo 1320 45th Street N. - Fargo, ND		395		0		0		395
Total Property Acquisitions	$	4,052	$	43,852	$	7,511	$	55,415

2011 Annual Report 20

Property Dispositions

During fiscal year 2011, the Company sold four multi-family residential properties and one property in each of its commercial medical, industrial and retail segments, for sales prices totaling approximately $83.3 million, compared to dispositions totaling $560,000 in fiscal year 2010.  The fiscal year 2011 and 2010 dispositions are detailed below.

Fiscal 2011 (May 1, 2010 to April 30, 2011)

	(in thousands)
Dispositions	Sales Price		Book Value and Sales Cost		Gain/(Loss)
Multi-Family Residential
504 unit - Dakota Hill at Valley Ranch - Irving, TX	$	36,100	$	30,909	$	5,191
192 unit - Neighborhood Apartments - Colorado Springs, CO		11,200		9,664		1,536
195 unit - Pinecone Apartments - Fort Collins, CO		15,875		10,422		5,453
210 unit - Miramont Apartments - Fort Collins, CO		17,200		10,732		6,468
		80,375		61,727		18,648
Commercial Medical
1,410 sq. ft. Edgewood Vista Patio Home 4330 - Fargo, ND		205		220		(15	)
Commercial Industrial
29,440 sq. ft. Waconia Industrial Building - Waconia, MN		2,300		1,561		739
Commercial Retail
41,000 sq. ft. Ladysmith Pamida - Ladysmith, WI		450		457		(7	)
Total Property Dispositions	$	83,330	$	63,965	$	19,365

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 Apartments - 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

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). 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.”  In addition, NAREIT’s computation of FFO excludes impairment charges for all periods presented, in accordance with guidance issued October 2011.  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.

2011 Annual Report 21

IRET management considers that FFO, by excluding depreciation costs, impairment write-downs, 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 impairment write-downs and 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 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, 2011 was $62.2 million, compared to $63.2 million and $65.0 million for the fiscal years ended April 30, 2010 and 2009, respectively. The increase in FFO in fiscal year 2011 compared to fiscal year 2010 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 2011 as Compared to Fiscal Year 2010.”

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

For the years ended April 30, 2011, 2010 and 2009:

	(in thousands, except per share and unit amounts)
Fiscal Years Ended April 30,	2011							2010							2009
	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	$	20,082				$		$	4,001				$		$	8,526				$
Less dividends to preferred shareholders		(2,372	)						(2,372	)						(2,372	)
Net income available to common shareholders		17,710			78,628		0.22		1,629			69,093		0.03		6,154			58,603		0.11
Adjustments:
Noncontrolling interests – Operating Partnership		4,449			20,154				562			20,825				2,227			21,217
Depreciation and amortization(1)		59,402							59,383							56,295
Impairment of real estate investments		0							1,678							338
Gains on depreciable property sales		(19,365	)						(68	)						(54	)
Funds from operations applicable to common shares and Units	$	62,196			98,782	$	0.63	$	63,184			89,918	$	0.70	$	64,960			79,820	$	0.81

(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 $58,488, $57,416 and $54,395 and depreciation/amortization from Discontinued Operations of $1,186, $2,347 and $2,319, less corporate-related depreciation and amortization on office equipment and other assets of $272, $380 and $419 for the fiscal year ended April 30, 2011, 2010 and 2009.

(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.

2011 Annual Report 22

Cash Distributions

The following cash distributions were paid to our common shareholders and UPREIT unitholders during fiscal years 2011, 2010 and 2009:

	Fiscal Years
Quarters	2011		2010		2009
First	$	.1715	$	.1705	$	.1685
Second		.1715		.1710		.1690
Third		.1715		.1715		.1695
Fourth		.1715		.1715		.1700
	$	.6860	$	.6845	$	.6770

The fiscal year 2011 cash distributions increased 0.2% over the cash distributions paid during fiscal year 2010, and fiscal year 2010 cash distributions increased 1.1% over the cash distributions paid during fiscal year 2009.

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 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.

For the fiscal year ended April 30, 2011, the Company paid distributions totaling $56.3 million in cash and $11.4 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 $58.8 million and funds from operations of $62.2 million.  Additional cash to fund the distribution was provided by property refinancings in which the Company was able to withdraw cash following the placement of new mortgages on Company properties.  Subsequent to the end of fiscal year 2011, the Board of Trustees of the Company approved a plan to reduce the Company’s quarterly distribution to $0.1300 from $0.1715 per common share and limited partnership unit (an indicated annual rate of $0.5200 per share/unit), effective with the next quarterly distribution planned for October 3, 2011.  The Board of Trustees currently intends to maintain this level of cash distribution for at least the next four quarters.   All future distributions remain subject to the discretion of the Company’s Board of Trustees.

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, general economic conditions, general market conditions for REITs, our operating performance, and the current trading price of our common shares, and the capital and debt markets

2011 Annual Report 23

may not consistently be available at all or on terms that we consider attractive. In particular, as a result of the recent economic downturn and turmoil in the capital markets, the availability of secured and unsecured loans was for a time sharply curtailed. We cannot predict whether these conditions will recur. 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, 2011, the Company had one secured line of credit with First International Bank and Trust, Watford City, North Dakota, as lead bank. This line of credit matures on August 11, 2013, and had, as of April 30, 2011, lending commitments of $50.0 million, with the capacity to grow to $60.0 million. Participants in the line of credit include several banks whose previous separate credit lines to the Company were terminated during the second quarter of fiscal year 2011 following their consolidation into the First International Bank-led facility. Participants in this secured credit facility as of April 30, 2011 included, in addition to First International Bank, the following financial institutions:  The Bank of North Dakota; First Western Bank and Trust; Dacotah Bank; United Community Bank of North Dakota: American State Bank & Trust Company and Town & Country Credit Union. As of April 30, 2011, the Company had advanced $30.0 million under the line of credit. The line of credit has a minimum outstanding principal balance requirement of $10.0 million. The facility includes customary loan covenants including restrictions regarding minimum debt-service ratios to be maintained in the aggregate and individually on properties in the collateral pool, and the Company is also required to maintain minimum depository account(s) totaling $6.0 million with First International, of which $1.5 million is to be held in a non-interest bearing account. As of April 30, 2011, the management of the Company believes it is in compliance with the facility covenants.

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 $350,000; United Community Bank, Minot, North Dakota, deposit of $275,000; Commerce Bank, A Minnesota Banking Corporation, deposit of $250,000; First International Bank, Watford City, North Dakota, deposit of $6.0 million; Peoples State Bank of Velva, North Dakota, deposit of $150,000; Associated Bank, Green Bay, Wisconsin, deposit of $200,000, and Equity Bank, Minnetonka, Minnesota, deposit of $300,000.

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 2011, the Company sold 1.8 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 $15.0 million, before offering expenses but after underwriting discounts and commissions.  As of April 30, 2011, the Company had available securities under this registration statement in the aggregate amount of approximately $18.2 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 registration statement remains effective.  To date the Company has not issued any common or preferred shares under this registration statement.

Economic conditions in the United States have begun to show some signs of improvement, but the sustainability of a recovery is still uncertain and economic growth has been sluggish and weak.  Credit markets also appear to have stabilized, and in our experience credit availability has improved compared to the recent recessionary period, as bank earnings and liquidity recover, particularly among the larger financial institutions. In fiscal year 2011, however, we observed that while benchmark interest rates such as LIBOR remained near historic lows, underwriting

2011 Annual Report 24

on commercial real estate continued to be more conservative compared to the underwriting standards employed prior to the recessionary period, with recourse security more frequently required, lower amounts of proceeds available, and lenders limiting the amount of financing available to existing relationships in an effort to manage capital allocations and credit risk. Accordingly, while we continue to expect to be able to refinance our maturing debt in our commercial office, medical, industrial and retail segments, we also expect lenders to continue to employ conservative underwriting regarding asset quality, occupancy levels and tenant creditworthiness, and we are correspondingly cautious regarding our ability in fiscal year 2012 to rely on cash-out refinancings at levels we have achieved in recent years to provide funds for investment opportunities and other corporate purposes. Additionally, while to date there has been no material negative impact on our ability to borrow in our multi-family segment, we continue to closely monitor proposals to modify the roles of the Federal Home Loan Mortgage Corporation (Freddie Mac) and the Federal National Mortgage Association (Fannie Mae) in financing multi-family residential properties; we consider that one of the consequences of a modification in the agencies’ roles could potentially be a narrowing of their lending focus away from the smaller secondary or tertiary markets which we generally target, to multi-family residential properties in major metropolitan markets. IRET obtains a majority of its multi-family debt from primarily Freddie Mac, and we continue to plan to refinance a majority of our maturing multi-family debt with these two entities, so any change in their ability or willingness to lend going forward would most likely result in higher loan costs and/or more constricted availability of financing for us.  As of April 30, 2011, approximately 36.4%, or $11.4 million of our mortgage debt maturing in the next twelve months is placed on multi-family residential assets, and approximately 63.6%, or $19.9 million, is placed on properties in our four commercial segments. Mortgage debt maturing in the first two quarters of fiscal year 2012 consists of approximately $7.9 million on multi-family residential assets, and approximately $10.0 million on properties in our four commercial segments. Of this $17.9 million, as of June 30, 2011, we have signed commitments to refinance approximately $6.5 million in commercial debt, and are working to either refinance, renew, pay off with cash or apply credit line facilities to the remainder of the maturing debt.

Despite these market uncertainties, and a continued tightening in credit standards by lenders, IRET during fiscal year 2011 acquired properties with an investment cost totaling $45.6 million.  In fiscal year 2011, IRET disposed of four multi-family residential properties and one property in each of its commercial medical, industrial and retail segments, for sales prices totaling approximately $83.3 million, compared to dispositions totaling $560,000 in 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. The maximum monthly investment permitted without prior Company approval is currently $10,000. During fiscal year 2011, the Company revised its DRIP to permit the Company to issue waivers to DRIP participants to provide for investments in excess of the $10,000 maximum monthly investment. No such waivers were granted during fiscal year 2011. During fiscal year 2011, approximately 1.7 million common shares were issued under the DRIP plan, with an additional 1.4 million common shares issued during fiscal year 2010, and 1.3 million common shares issued during fiscal year 2009.

The issuance of UPREIT Units for property acquisitions continues to be a source of capital for the Company.  Approximately 555,000 units were issued in connection with property acquisitions during fiscal year 2011, and approximately 390,000 units and 362,000 units, respectively, were issued in connection with property acquisitions during fiscal years 2010 and 2009.

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 2011 by $31.2 million. Additionally, the equity capital of the Company increased by $5.0 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 $36.2 million from these sources during fiscal year 2011. The Company’s equity capital increased by $122.8 million and $21.1 million in fiscal years 2010 and 2009, 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 in exchange for UPREIT units.

Cash and cash equivalents on April 30, 2011 totaled $41.2 million, compared to $54.8 million and $33.2 million on the same date in 2010 and 2009, respectively. Net cash provided by operating activities decreased slightly to $58.8 million in fiscal year 2011 from $61.4 million in fiscal year 2010 due primarily to changes in deferred charges and

2011 Annual Report 25

accounts payable, accrued expenses, and other liabilities. 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 investing activities was $11.7 million in fiscal year 2011, compared to $79.0 million of net cash used by investing activities in fiscal year 2010. Net cash used by investing activities was $54.4 million in fiscal year 2009. The increase in net cash provided by investing activities in fiscal year 2011 compared to fiscal year 2010 was primarily a result of an increase in proceeds from the sale of real estate coupled with a reduction in expenditures for acquisitions and improvements of real estate investments. Net cash used by financing activities during fiscal year 2011 was $84.1 million, compared to $39.1 million provided by financing activities during fiscal year 2010, with the change due primarily to a decrease in proceeds from the sale of common shares, a decrease in proceeds from mortgages payable and an increase in principal payments on mortgages payable. 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.

Financial Condition

Mortgage Loan Indebtedness. Mortgage loan indebtedness decreased to $993.8 million on April 30, 2011 from  $1.1 billion on April 30, 2010, due to principal payments and loan payoffs, net of new debt. Approximately 99.8% 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, 2011, the weighted average rate of interest on the Company’s mortgage debt was 5.92%, compared to 6.17% on April 30, 2010.

Revolving lines of credit. As of April 30, 2011, the Company had one secured line of credit with First International Bank and Trust, Watford City, North Dakota, as lead bank. This line of credit matures on August 11, 2013, and had, as of April 30, 2011, lending commitments of $50.0 million, with the capacity to grow to $60.0 million. Participants in the line of credit include several banks whose previous separate credit lines to the Company were terminated during the second quarter of fiscal year 2011 following their consolidation into the First International Bank-led facility. Participants in this secured credit facility as of April 30, 2011 included, in addition to First International Bank, the following financial institutions:  The Bank of North Dakota; First Western Bank and Trust; Dacotah Bank; United Community Bank of North Dakota: American State Bank & Trust Company and Town & Country Credit Union. As of April 30, 2011, the Company had advanced $30.0 million under the line of credit. The line of credit has a minimum outstanding principal balance requirement of $10.0 million. The facility includes customary loan covenants including restrictions regarding minimum debt-service ratios to be maintained in the aggregate and individually on properties in the collateral pool, and the Company is also required to maintain minimum depository account(s) totaling $6.0 million with First International, of which $1.5 million is to be held in a non-interest bearing account. As of April 30, 2011, the management of the Company believes it is in compliance with the facility covenants.

Mortgage Loans Receivable. Mortgage loans receivable net of allowance decreased to approximately $156,000 at April 30, 2011, from approximately $158,000 at April 30, 2010.

Property Owned. Property owned was $1.8 billion at April 30, 2011 and 2010. Acquisitions and improvements to existing properties in fiscal year 2011, offset by fiscal year 2011 dispositions, resulted in no net increase in property owned as of April 30, 2011 compared to April 30, 2010.

Cash and Cash Equivalents. Cash and cash equivalents on April 30, 2011 totaled $41.2 million, compared to $54.8 million on April 30, 2010. The decrease in cash on hand on April 30, 2011, as compared to April 30, 2010, was due primarily to the acquisition and development of property, as well as the paying down of mortgage debt.

Marketable Securities. IRET’s investment in marketable securities classified as available-for-sale increased to  approximately $625,000 on April 30, 2011, from $420,000 on April 30, 2010. 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 20.1 million units on April 30, 2011, compared to 20.5 million units on April 30, 2010. The decrease in units outstanding

2011 Annual Report 26

at April 30, 2011 as compared to April 30, 2010, 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, 2011 totaled 80.5 million compared to 75.8 million common shares outstanding on April 30, 2010. This increase in common shares outstanding from April 30, 2010 to April 30, 2011 was due to the issuance of common shares pursuant to our shelf registration statement and distribution reinvestment plan. During the first quarter of fiscal year 2011, the Company sold 1.8 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 $15.0 million were used for general corporate purposes including the acquisition of investment properties. The Company issued common shares pursuant to our Distribution Reinvestment and Share Purchase Plan, consisting of approximately 1.7 million common shares issued during fiscal year 2011, for a total value of approximately $14.5 million. Conversions of approximately 1.0 million UPREIT Units to common shares during fiscal year 2011, for a total of approximately $6.9 million in IRET shareholders’ equity, also increased the Company’s common shares of beneficial interest outstanding during the twelve months ended April 30, 2011 compared to the twelve months ended April 30, 2010. Preferred shares of beneficial interest outstanding on April 30, 2011 and 2010 totaled 1.2 million.

Contractual Obligations and Other Commitments

The primary contractual obligations of the Company relate to its borrowings under its line of credit and mortgage notes payable. The Company’s line of credit matures in August 2013, and had $30.0 million in loans outstanding at April 30, 2011. The principal and interest payments on the mortgage notes payable for the years subsequent to April 30, 2011, 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, 2011. The “Other Debt” category consists of principal and interest payments on new loans for our Jamestown Mall and Trinity Hospital build-to-suit development projects, which are financed with Recovery Zone Facility Bonds, and of an unsecured promissory note issued by the Company to the sellers of an office/warehouse property located in Minnesota (a portion of the purchase price was paid by the Company in the form of a $1.0 million promissory note with a ten-year term; if the tenant defaults in the initial terms of the lease, the then-current balance of the promissory note is forfeited to the Company).

As of April 30, 2011, 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 1.3 to 90 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, 2011, 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)	$	1,346,133	$	116,388	$	220,952	$	257,208	$	751,585
Line of credit(1)	$	30,000	$	0	$	30,000	$	0	$	0
Other Debt (principal and interest)	$	12,649	$	543	$	1,162	$	1,150	$	9,794
Operating Lease Obligations	$	24,960	$	501	$	999	$	974	$	22,486
Purchase Obligations	$	5,125	$	5,125	$	0	$	0	$	0

(1) Amount includes principal payments only. The Company will pay interest on outstanding indebtedness based on the rates and terms summarized in Note 7 to the Consolidated Financial Statements.

2011 Annual Report 27

Off-Balance-Sheet Arrangements

As of April 30, 2011, the Company had no significant off-balance-sheet arrangements, as defined in Item 303(a)(4)(ii) of SEC Regulation S-K.

Recent Developments

Common and Preferred Share Distributions. On June 30, 2011, 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, 2011. On July 1, 2011, 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, 2011. Subsequent to the end of fiscal year 2011, the Company’s Board of Trustees approved a plan to reduce the Company’s quarterly distribution to $0.1300 from $0.1715 per common share and limited partnership unit, effective with the next quarterly distribution planned for October 3, 2011.  The Board of Trustees currently intends to maintain this level of cash distribution for at least the next four quarters.  All future distributions remain subject to the discretion of the Company’s Board of Trustees.

Pending Acquisitions.  The Company has signed purchase agreements to acquire the following properties; all of these pending acquisitions are subject to various closing conditions and contingencies, and no assurances can be given that any of these acquisitions will be completed:

A 147-unit multi-family residential property in St. Cloud, Minnesota for a purchase price totaling approximately $10.9 million, of which approximately $7.2 million would consist of the assumption of existing debt, with the remaining approximately $3.7 million paid in cash (approximately $2.2 million) and by the issuance of limited partnership units of the Operating Partnership valued at approximately $1.5 million;

Two multi-family residential projects in Billings, Montana with a total of 36 units, for a purchase price totaling approximately $2.1 million, of which approximately $2.0 million would be paid through the issuance of limited partnership units of the Operating Partnership;

Two multi-family residential properties in Sioux Falls, South Dakota, with 50 units and 24 units, respectively, for purchase prices of $4.7 million and $2.3 million, respectively, to be paid in cash;

Six senior housing projects located in Boise, Idaho and towns surrounding Boise, with a total of approximately 209 units, for a total purchase price of approximately $29.5 million.  The Company currently expects that this acquisition will close in the second quarter of the current fiscal year, although, as noted above, the acquisition is subject to various closing conditions and contingencies, and no assurance can be given that the acquisition will be completed.

Subsequent to the end of fiscal year 2011, the Company terminated its previously-disclosed agreement for the purchase of a retail property located in Robbinsdale, Minnesota.

Development Projects.  Subsequent to the end of fiscal year 2011, in June 2011, the Company commenced construction on an approximately 159-unit apartment project in Rochester, Minnesota, located adjacent to its existing Quarry Ridge Apartment Homes.  The Company currently estimates that construction costs will total approximately $19.4 million, and that the project will be completed in approximately 14 months.

2011 Annual Report 28

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, 2011 and 2010, and the related consolidated statements of operations, equity, and cash flows for each of the three years in the period ended April 30, 2011. 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, 2011, 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 that 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.

2011 Annual Report F-1

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Investors Real Estate Trust and subsidiaries as of April 30, 2011 and 2010, and the results of their operations and their cash flows for each of the three years in the period ended April 30, 2011, 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, 2011, 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, 2011 (December 12, 2011, as to the effects of discontinued operations as disclosed in Note 12)

2011 Annual Report F-2

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

April 30, 2011 and 2010

	(in thousands)
	April 30, 2011			April 30, 2010
ASSETS
Real estate investments
Property owned	$	1,770,798		$	1,800,519
Less accumulated depreciation		(328,952	)		(308,626	)
		1,441,846			1,491,893
Development in progress		9,693			2,831
Unimproved land		6,550			6,007
Mortgage loans receivable, net of allowance of $3 and $3, respectively		156			158
Total real estate investments		1,458,245			1,500,889
Other assets
Cash and cash equivalents		41,191			54,791
Marketable securities – available-for-sale		625			420
Receivable arising from straight-lining of rents, net of allowance of $996 and $912, respectively		18,933			17,320
Accounts receivable, net of allowance of $317 and $257, respectively		5,646			4,916
Real estate deposits		329			516
Prepaid and other assets		2,351			1,189
Intangible assets, net of accumulated amortization of $42,154 and $39,571, respectively		49,832			50,700
Tax, insurance, and other escrow		15,268			9,301
Property and equipment, net of accumulated depreciation of $1,231 and $924, respectively		1,704			1,392
Goodwill		1,127			1,388
Deferred charges and leasing costs, net of accumulated amortization of $13,675 and $13,131, respectively		20,112			18,108
TOTAL ASSETS	$	1,615,363		$	1,660,930
LIABILITIES AND EQUITY
LIABILITIES
Accounts payable and accrued expenses	$	37,879		$	38,514
Revolving lines of credit		30,000			6,550
Mortgages payable		993,803			1,057,619
Other		8,404			1,320
TOTAL LIABILITIES		1,070,086			1,104,003
COMMITMENTS AND CONTINGENCIES (NOTE 15)
REDEEMABLE NONCONTROLLING INTERESTS – CONSOLIDATED REAL ESTATE ENTITIES		987			1,812
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, 2011 and April 30, 2010, aggregate liquidation preference of $28,750,000)		27,317			27,317
Common Shares of Beneficial Interest (Unlimited authorization, no par value, 80,523,265 shares issued and outstanding at April 30, 2011, and 75,805,159 shares issued and outstanding at April 30, 2010)		621,936			583,618
Accumulated distributions in excess of net income		(237,563	)		(201,412	)
Total Investors Real Estate Trust shareholders’ equity		411,690			409,523
Noncontrolling interests – Operating Partnership (20,067,350 units at April 30, 2011 and 20,521,365 units at April 30, 2010)		123,627			134,970
Noncontrolling interests – consolidated real estate entities		8,973			10,622
Total equity		544,290			555,115
TOTAL LIABILITIES AND EQUITY	$	1,615,363		$	1,660,930

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

2011 Annual Report F-3

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

for the years ended April 30, 2011, 2010, and 2009

	(in thousands, except per share data)
	2011			2010			2009
REVENUE
Real estate rentals	$	192,178		$	186,321		$	183,153
Tenant reimbursement		45,007			44,994			45,167
TOTAL REVENUE		237,185			231,315			228,320
EXPENSES
Depreciation/amortization related to real estate investments		55,809			55,054			52,335
Utilities		18,238			17,101			18,112
Maintenance		29,240			26,972			26,431
Real estate taxes		30,852			30,210			29,077
Insurance		2,304			3,615			2,864
Property management expenses		21,276			18,380			16,716
Administrative expenses		6,617			5,716			4,430
Advisory and trustee services		605			502			452
Other expenses		1,774			2,513			1,440
Amortization related to non-real estate investments		2,679			2,362			2,060
Impairment of real estate investments		0			708			0
TOTAL EXPENSES		169,394			163,133			153,917
Gain on involuntary conversion		0			1,660			0
Interest expense		(63,941	)		(65,581	)		(64,928	)
Interest income		259			539			599
Other income		282			355			314
Income from continuing operations		4,391			5,155			10,388
Income (loss) from discontinued operations		19,960			(570	)		325
NET INCOME		24,351			4,585			10,713
Net income attributable to noncontrolling interests – Operating Partnership		(4,449	)		(562	)		(2,227	)
Net loss (income) attributable to noncontrolling interests – consolidated real estate entities		180			(22	)		40
Net income attributable to Investors Real Estate Trust		20,082			4,001			8,526
Dividends to preferred shareholders		(2,372	)		(2,372	)		(2,372	)
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS	$	17,710		$	1,629		$	6,154
Earnings per common share from continuing operations – Investors Real Estate Trust – basic and diluted	$	.02		$	.04		$	.10
Earnings (loss) per common share from discontinued operations – Investors Real Estate Trust – basic and diluted		.20			(.01	)		.01
NET INCOME PER COMMON SHARE – BASIC & DILUTED	$	.22		$	.03		$	.11
DIVIDENDS PER COMMON SHARE	$	.6860		$	.6845		$	.6770

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

2011 Annual Report F-4

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY

for the years ended April 30, 2011, 2010, and 2009

	(in thousands)
	NUMBER OF PREFERRED SHARES		PREFERRED SHARES		NUMBER OF COMMON SHARES			COMMON SHARES			ACCUMULATED DISTRIBUTIONS  IN EXCESS OF  NET INCOME			NONCONTROLLING  INTERESTS			TOTAL EQUITY
BALANCE APRIL 30, 2008		1,150	$	27,317		57,732		$	439,255		$	(122,498	)	$	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	)	$	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	)	$	145,592		$	555,115
Net income attributable to Investors Real Estate Trust and nonredeemable noncontrolling interests												20,082			4,282			24,364
Distributions - common shares												(53,861	)		(13,803	)		(67,664	)
Distributions - preferred shares												(2,372	)					(2,372	)
Distribution reinvestment plan						1,334			11,373									11,373
Shares issued						2,376			19,851									19,851
Partnership units issued															4,996			4,996
Redemption of units for common shares						1,009			6,905						(6,905	)		0
Adjustments to redeemable noncontrolling interests									370									370
Fractional shares repurchased						(1	)		(10	)								(10	)
Other									(171	)					(1,562	)		(1,733	)
BALANCE APRIL 30, 2011		1,150	$	27,317		80,523		$	621,936		$	(237,563	)	$	132,600		$	544,290

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

2011 Annual Report F-5

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

for the years ended April 30, 2011, 2010, and 2009

	(in thousands)
	2011			2010			2009
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income	$	24,351		$	4,585		$	10,713
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		61,344			61,184			57,832
Gain on sale of real estate, land and other investments		(19,365	)		(68	)		(54	)
Gain on involuntary conversion		0			(1,660	)		0
Impairment of real estate investments		0			1,678			338
Donation of real estate investments		0			450			0
Bad debt expense		733			1,399			2,472
Changes in other assets and liabilities:
Increase in receivable arising from straight-lining of rents		(1,732	)		(1,443	)		(2,403	)
Increase in accounts receivable		(914	)		(3,371	)		(603	)
Increase in prepaid and other assets		(1,162	)		(138	)		(702	)
Decrease (increase) in tax, insurance and other escrow		1,469			(2,040	)		1,381
Increase in deferred charges and leasing costs		(6,501	)		(4,731	)		(5,686	)
Increase (decrease) in accounts payable, accrued expenses and other liabilities		551			5,567			(3,153	)
Net cash provided by operating activities		58,774			61,412			60,135
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from real estate deposits		2,766			2,588			3,645
Payments for real estate deposits		(2,579	)		(3,016	)		(2,354	)
Principal proceeds on mortgage loans receivable		2			2			389
Proceeds from sale of marketable securities - available-for-sale		95			0			0
Purchase of marketable securities - available-for-sale		(300	)		0			0
Increase in lender holdbacks for improvements		(7,436	)		0			0
Proceeds from sale of real estate - discontinued operations		81,539			103			68
Proceeds from sale of real estate and other investments		74			40			0
Insurance proceeds received		347			1,395			2,962
Payments for acquisitions and improvements of real estate investments		(62,824	)		(80,069	)		(59,077	)
Net cash provided (used) by investing activities		11,684			(78,957	)		(54,367	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from mortgages payable		139,947			166,490			73,530
Principal payments on mortgages payable		(213,658	)		(180,482	)		(67,230	)
Principal payments on revolving lines of credit and other debt		(25,650	)		(15,567	)		(14,073	)
Proceeds from revolving lines of credit and other debt		56,300			15,500			20,500
Proceeds from sale of common shares, net of issue costs		19,598			108,271			5,978
Repurchase of fractional shares and partnership units		(10	)		(11	)		(10	)
Net (payments) proceeds from noncontrolling partner – consolidated real estate entities		(425	)		(475	)		717
Distributions paid to common shareholders, net of reinvestment of $10,627, $9,762 and $10,603, respectively		(43,234	)		(37,323	)		(29,009	)
Distributions paid to preferred shareholders		(2,372	)		(2,372	)		(2,372	)
Distributions paid to noncontrolling interests – Unitholders of the Operating Partnership, net reinvestment of $746, $772 and $782, respectively		(13,057	)		(13,489	)		(13,601	)
Distributions paid to noncontrolling interests – consolidated real estate entities		(1,055	)		(1,273	)		(165	)
Distributions paid to redeemable noncontrolling interests-consolidated real estate entities		(442	)		(177	)		(112	)
Redemption of partnership units		0			0			(158	)
Net cash (used) provided by financing activities		(84,058	)		39,092			(26,005	)
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS		(13,600	)		21,547			(20,237	)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR		54,791			33,244			53,481
CASH AND CASH EQUIVALENTS AT END OF YEAR	$	41,191		$	54,791		$	33,244

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

2011 Annual Report F-6

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

for the years ended April 30, 2011, 2010, and 2009

	(in thousands)
	2011		2010			2009
SUPPLEMENTARY SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
Distribution reinvestment plan	$	10,627	$	9,762		$	10,603
Operating partnership distribution reinvestment plan		746		772			782
Assets acquired through the issuance of operating partnership units		4,996		3,897			3,730
Operating partnership units converted to shares		6,905		3,755			5,034
Real estate investment acquired through assumption of indebtedness and accrued costs		9,895		2,569			0
Adjustments to accounts payable included within real estate investments		933		324			(90	)
Fair value adjustments to redeemable noncontrolling interests		370		(192	)		6
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the year for:
Interest on mortgages	$	63,163	$	67,234		$	67,947
Interest other		1,399		682			421
	$	64,562	$	67,916		$	68,368

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

2011 Annual Report F-7

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

April 30, 2011, 2010, and 2009

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, except for taxes on undistributed REIT taxable income and taxes on the income generated by our taxable REIT subsidiary (“TRS”). Our TRS is subject to corporate federal and state income tax on its taxable income at regular statutory rates. We have considered estimated future taxable income and have determined that there were no material income tax provisions or material net deferred income tax items for our TRS for the years ended April 30, 2011 and 2010. 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, Michigan, Missouri,  Montana, Nebraska, South Dakota, Wisconsin and Wyoming. As of April 30, 2011, IRET owned 78 multi-family residential properties with approximately 8,661 apartment units and 176 commercial properties, consisting of commercial office, commercial medical, commercial industrial and commercial retail properties, totaling approximately 12.2 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 80.1% and 78.7%, respectively, as of April 30, 2011 and 2010, 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 redemptions 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

In January 2011, the Financial Accounting Standards Board (“FASB”) issued an update to the guidance contained in Accounting Standards Codification (“ASC”) 310, Receivables.  The new guidance requires companies to provide more information about the credit quality of their financing receivables in the disclosures to financial statements including, but not limited to, significant purchases and sales of financing receivables, aging information and credit quality indicators. The adoption of this accounting guidance did not have a significant impact on the Company’s consolidated financial statements.

2011 Annual Report F-8

NOTE 2 • continued

In January 2010, the FASB issued ASU No. 2010-06, Improving Disclosures About Fair Value (“ASU 2010-06”), which requires new disclosures about fair value measurements. Specifically, a reporting entity should disclose separately the amounts of significant transfers in and out of Level 1 and Level 2 fair value measurements and describe the reasons for the transfers. Additionally, the reconciliation for Level 3 fair value measurements should present separately information about purchasers, sales, issuances and settlements. To date, the Company has not had any transfers in and out of Level 1 and Level 2 fair value measurements, nor does it have any Level 3 fair value measurements. Therefore, ASU 2010-06 did not have any impact on the fair value disclosures included in 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 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 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 recorded at fair value 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

2011 Annual Report F-9

NOTE 2 • continued

performance, market conditions, expected holding period of each asset and legal and environmental concerns. If 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 from actual results. Plans to hold properties over longer periods decrease the likelihood of recording impairment losses. No impairment losses were recorded in fiscal year 2011.  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, in fiscal year 2010.  This property’s tenant vacated the premises but continued to pay rent under a lease agreement that expired 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.

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 principles 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, 2011 and 2010, respectively, the Company added approximately $6.5 million and $7.5 million of new intangible assets and $32,000 and $20,000 of new intangible liabilities. The weighted average lives of the intangible assets and intangible liabilities acquired in the twelve months ended April 30, 2011 and 2010 are 9.5 years and 17.4 years, respectively.  Amortization of

2011 Annual Report F-10

NOTE 2 • continued

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 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, 2011 and 2010 were as follows:

	(in thousands)
	April 30, 2011			April 30, 2010
Identified intangible assets (included in intangible assets):
Gross carrying amount	$	91,986		$	90,271
Accumulated amortization		(42,154	)		(39,571	)
Net carrying amount	$	49,832		$	50,700
Indentified intangible liabilities (included in other liabilities):
Gross carrying amount	$	1,104		$	1,260
Accumulated amortization		(900	)		(940	)
Net carrying amount	$	204		$	320

The effect of amortization of acquired below-market leases and acquired above-market leases on rental income was approximately $(72,000) and $(45,000) for the twelve months ended April 30, 2011 and 2010, 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)
2012	$	45
2013		32
2014		35
2015		18
2016		14

Amortization of all other identified intangible assets (a component of depreciation/amortization related to real estate investments) was $7.1 million and $8.7 million for the twelve months ended April 30, 2011 and 2010, 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)
2012	$	5,521
2013		4,546
2014		4,140
2015		3,783
2016		3,566

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 book values as of April 30, 2011 and 2010 were $1.1 million and $1.4 million, respectively. 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 2011 the Company disposed of four multi-family residential properties that had goodwill assigned, and as result, approximately $261,000 of goodwill was derecognized.

2011 Annual Report F-11

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 additional property management offices in Kansas, Minnesota, Missouri, Montana, Nebraska, North Dakota and South Dakota. The balance sheet reflects these assets at cost, net of accumulated depreciation. As of April 30, 2011 and 2010, the cost was $2.9 million and $2.3 million, respectively. Accumulated depreciation was approximately $1.2 million and $924,000 as of April 30, 2011 and 2010, 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 $350,000; United Community Bank, Minot, North Dakota, deposit of $275,000; Commerce Bank, A Minnesota Banking Corporation, deposit of $250,000; First International Bank, Watford City, North Dakota, deposit of $6.0 million; Peoples State Bank of Velva, North Dakota, deposit of $150,000; Associated Bank, Green Bay, Wisconsin, deposit of $200,000, and Equity Bank, Minnetonka, Minnesota, deposit of $300,000.

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 that 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, 2011, 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

2011 Annual Report F-12

NOTE 2 • continued

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, as well as the Company’s ability and intent to hold the security until recovery. The Company does not engage in trading activities.

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, 2011, 2010 and 2009 is as follows:

	(in thousands)
	2011			2010			2009
Balance at beginning of year	$	1,172		$	1,131		$	1,264
Provision		733			1,399			2,472
Write-off		(589	)		(1,358	)		(2,605	)
Balance at close of year	$	1,316		$	1,172		$	1,131

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-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:

2011 Annual Report F-13

NOTE 2 • continued

	(in thousands)
	For Years Ended April 30,
Amounts Attributable to Investors Real Estate Trust	2011			2010				2009
Income from continuing operations – Investors Real Estate Trust		$	4,111		$	4,444			$	8,284
Discontinued Operations – Investors Real Estate Trust			15,971			(443	)			242
Net income attributable to Investors Real Estate Trust		$	20,082		$	4,001			$	8,526

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, 2011, 2010 and 2009, 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 subject 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 years 2011 and 2010, the Company’s TRS had a net operating loss.  There were no income tax provisions or material deferred income tax items for our TRS for the fiscal years ended April 30, 2011 and 2010.  The Company’s TRS is the tenant in the Company’s Wyoming assisted living facilities.

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.

Distributions for the calendar year ended December 31, 2010 were characterized, for federal income tax purposes, as 28.53% ordinary income and 71.47% return of capital.

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.

2011 Annual Report F-14

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 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, 2011 and 2010, these amounts totaled $23.5 million and $25.2 million, respectively.

NOTE 4 • PROPERTY OWNED

Property, consisting principally of real estate, is stated at cost less accumulated depreciation and totaled $1.4 billion and $1.5 billion as of April 30, 2011, and  2010, respectively.

Construction period interest of approximately $152,000, $19,000, and $912,000 has been capitalized for the years ended April 30, 2011, 2010, and 2009, respectively.

The future minimum lease receipts to be received under non-cancellable leases for commercial properties as of April 30, 2011, assuming that no options to renew or buy out the lease are exercised, are as follows:

Year Ended April 30,	(in thousands)
2012	$	111,017
2013		100,265
2014		88,497
2015		75,722
2016		64,316
Thereafter		302,096
	$	741,913

During fiscal year 2011, the Company incurred no losses due to impairment. 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 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.

2011 Annual Report F-15

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, 2011, are as follows:

Year Ended April 30,	(in thousands)
2012	$	2
2013		157
		159
Less allowance for doubtful accounts		(3	)
	$	156

There were no non-performing mortgage loans receivable as of April 30, 2011 and 2010.

NOTE 6 • MARKETABLE SECURITIES

The amortized cost and fair value of marketable securities available-for-sale at April 30, 2011 and 2010 are as follows.

	(in thousands)
2011	Amortized Cost			Gross Unrealized  Gains			Gross Unrealized  Losses			Fair Value
Bank certificates of deposit		$	625		$	0		$	0		$	625
		$	625		$	0		$	0		$	625

	(in thousands)
2010	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, 2011, $275,000 of the investment in bank certificates of deposit will mature in less than one year, $50,000 will mature in May 2012 and the remaining $300,000 will mature in March 2014.

There were no realized gains or losses on sales of securities available-for-sale for the fiscal years ended April 30, 2011, 2010 and 2009. There were no other-than-temporary impairment losses incurred on the securities available-for-sale for the fiscal years ended April 30, 2011, 2010 and 2009.

NOTE 7 • LINE OF CREDIT

IRET has a line of credit with one financial institution as lead bank as of April 30, 2011. Interest payments on outstanding borrowings are due monthly. This credit facility is summarized in the following table:

	(in thousands)
Financial Institution	Amount  Available		Amount  Outstanding as of April 30,  2011			Amount  Outstanding as of April  30, 2010				Applicable  Interest Rate as of April 30, 2011			Maturity  Date	Weighted  Average Int. Rate on Borrowings during fiscal year 2011
First International Bank & Trust	$	50,000		$	30,000		$	0	(1)		5.65	%	8/11/13		5.73	%

2011 Annual Report F-16

NOTE 7 • continued

As of April 30, 2011, the Company had one secured line of credit with First International Bank and Trust, Watford City, North Dakota, as lead bank. This line of credit matures on August 11, 2013, and had, as of April 30, 2011, lending commitments of $50.0 million, with the capacity to grow to $60.0 million, subject to identifying additional interested participating banks. Participants in the line of credit include several banks whose previous separate credit lines to the Company were terminated during the second quarter of fiscal year 2011 following their consolidation into the First International Bank-led facility. Participants in this secured credit facility as of April 30, 2011 included, in addition to First International Bank, the following financial institutions:  The Bank of North Dakota; First Western Bank and Trust; Dacotah Bank; United Community Bank of North Dakota; American State Bank & Trust Company and Town & Country Credit Union. As of April 30, 2011, the Company had advanced $30.0 million under the line of credit. The line of credit has a minimum outstanding principal balance requirement of $10.0 million. The interest rate on borrowings under the facility is Wall Street Journal Prime Rate +1.0%, with a floor of 5.65% and a cap of 8.65% during the initial three-year term of the facility; interest-only payments are due monthly based on the total amount of advances outstanding.  The line of credit may be prepaid at par at any time. The facility includes customary loan covenants including restrictions regarding minimum debt-service ratios to be maintained in the aggregate and individually on properties in the collateral pool, and the Company is also required to maintain minimum depository account(s) totaling $6.0 million with First International, of which $1.5 million is to be held in a non-interest bearing account. As of April 30, 2011, 26 properties with a total cost of $122.1 million collateralized this line of credit. As of April 30, 2011, the management of the Company believes it is in compliance with the facility covenants.

(1) As of April 30, 2010, the Company had $4.0 million in borrowings outstanding under a $14.0 million line of credit with First International Bank and Trust. This $14.0 million line of credit, and three other lines of credit that were outstanding at various times during fiscal years 2011, 2010 and 2009, with, respectively, First Western Bank and Trust, United Community Bank and Dacotah Bank, were replaced by the current multi-bank line of credit.  As of April 30, 2010, the Company had outstanding borrowings at United Community Bank and Dacotah Bank of $1.1 million and $1.5 million, respectively.

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.As of April 30, 2011, the management of the Company believes there are no defaults or material compliance issues in regard to any mortgages payable.Interest rates on mortgages payable range from 2.82% to 8.25%, and the mortgages have varying maturity dates from June 1, 2011, through June 9, 2035.

Of the mortgages payable, the balance of fixed rate mortgages totaled $992.3 million at April 30, 2011 and $1.0 billion at April 30, 2010, and the balances of variable rate mortgages totaled $1.5 million and $29.0 million as of April 30, 2011, and 2010, 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, 2011, the weighted average rate of interest on the Company’s mortgage debt was 5.92%, compared to 6.17% on April 30, 2010. The aggregate amount of required future principal payments on mortgages payable as of April 30, 2011, is as follows:

Year Ended April 30,	(in thousands)
2012	$	58,741
2013		50,092
2014		65,354
2015		92,548
2016		77,771
Thereafter		649,297
Total payments	$	993,803

2011 Annual Report F-17

NOTE 9 • TRANSACTIONS WITH RELATED PARTIES

BANKING SERVICES

The Company has an ongoing banking relationship 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.  Currently, and during fiscal year 2011, the Company has two mortgage loans outstanding with First International, with original principal balances of $3.2 million (Grand Forks MedPark Mall) and $2.4 million (Georgetown Square/Fox River), respectively, bearing interest at 6.25% and 7.25% per annum.  For a portion of fiscal year 2011, the Company had outstanding a third mortgage loan with First International in the amount of approximately $406,000 (Dakota West Plaza), bearing interest at 7.63% per annum; this loan was repaid in the first quarter of fiscal year 2011.  The Company paid interest on these loans of approximately $190,000, $165,000 and $3,000, respectively, in fiscal year 2011, and paid $32,000 in origination fees and closing costs on the Grand Forks MedPark Mall loan.  For a portion of fiscal year 2011, the Company maintained a $14.0 million unsecured line of credit with First International, for which it paid a total of approximately $72,000 in interest during fiscal year 2011.  This line of credit was terminated during the second quarter of fiscal year 2011 and replaced with a multi-bank line of credit with a current capacity of $50.0 million, of which First International is the lead bank and a participant with a $12.0 million commitment.  In fiscal year 2011, the Company paid First International a total of $212,000 in interest on First International’s portion of the outstanding balance of this credit line, and paid fees of $219,000.  In connection with this multi-bank line of credit, the Company maintains compensating balances with First International totaling $6.0 million, of which $1.5 million is held in a non-interest bearing account, and $4.5 million is held in an account that pays the Company interest on the deposited amount of 0.75% per annum.  The Company also maintains a number of checking accounts with First International.  In fiscal year 2011, the Company paid less than $500 in total in various bank service and other fees charged on these checking accounts.

In fiscal years 2010 and 2009, the Company paid interest of approximately $238,000 and $91,000, respectively, for borrowing under the $14.0 million line of credit that was subsequently terminated in fiscal year 2011, and paid a $10,000 renewal fee for the line of credit in fiscal year 2010.   In fiscal year 2010, the Company paid interest and fees on outstanding mortgage loans totaling approximately $789,000, and paid interest in fiscal year 2009 on mortgage loans outstanding of approximately $204,000.  In fiscal year 2010 and 2009, the Company paid under $500 in total in various bank service and other fees charged on checking accounts maintained with First International.

Total payments of interest and fees from the Company to First International Bank in fiscal year 2011 were approximately $893,000, in fiscal year 2010 were $1.0 million and in fiscal year 2009 were $295,000.

NOTE 10 • ACQUISITIONS AND DISPOSITIONS IN FISCAL YEARS 2011 AND 2010

PROPERTY ACQUISITIONS

IRET Properties paid approximately $45.6 million for real estate properties added to its portfolio during fiscal year 2011, compared to $55.4 million in fiscal year 2010. Of the $45.6 million paid for real estate properties added to the Company’s portfolio in fiscal year 2011, approximately $5.0 million consisted of the value of limited partnership units of the Operating Partnership and approximately $9.9 million consisted of the assumption of mortgage debt, with the remainder paid in cash. The Company expensed approximately $179,000 of transaction costs related to the acquisitions in fiscal year 2011. Of the $55.4 million paid in fiscal year 2010, approximately $3.9 million was paid in the form 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. The fiscal year 2011 and 2010 additions are detailed below.

2011 Annual Report F-18

NOTE 10 • continued

Fiscal 2011 (May 1, 2010 to April 30, 2011)

	(in thousands)
Acquisitions	Land		Building		Intangible Assets		Acquisition Cost
Multi-Family Residential
24 unit - North Pointe 2 - Bismarck, ND	$	159	$	1,713	$	0	$	1,872
44 unit - Sierra Vista - Sioux Falls, SD		241		2,097		0		2,338
		400		3,810		0		4,210
Commercial Office
58,574 sq. ft. Omaha 10802 Farnam Dr - Omaha, NE		2,462		4,374		1,459		8,295
Commercial Medical
14,705 sq. ft. Billings 2300 Grant Road - Billings, MT		649		1,216		657		2,522
14,640 sq. ft. Missoula 3050 Great Northern - Missoula, MT		640		1,331		752		2,723
108,503 sq. ft. Edgewood Vista Minot - Minot, ND		1,046		11,590		2,545		15,181
23,965 sq. ft. Edgewood Vista Spearfish Expansion - Spearfish, SD1		0		2,777		0		2,777
		2,335		16,914		3,954		23,203
Commercial Industrial
42,244 sq. ft. Fargo 1320 45th St N - Fargo, ND2		0		1,634		0		1,634
Commercial Retail
47,709 sq. ft. Minot 1400 31st Ave - Minot, ND		1,026		6,143		1,081		8,250
Total Property Acquisitions	$	6,223	$	32,875	$	6,494	$	45,592

(1) Expansion project placed in service January 10, 2011. Approximately $497,000 of this cost was incurred in the three months ended April 30, 2011.

(2) Development property placed in service June 22, 2010. Additional costs incurred in fiscal year 2010 totaled $2.3 million, for a total project cost at April 30, 2011 of $3.9 million.

2011 Annual Report F-19

NOTE 10 • continued

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
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
Unimproved Land
Fargo 1320 45th Street N. - Fargo, ND		395		0		0		395
Total Property Acquisitions	$	4,052	$	43,852	$	7,511	$	55,415

PROPERTY DISPOSITIONS

During fiscal year 2011, the Company disposed of six properties and one patio home for an aggregate sale price of $83.3 million, compared to two small properties for an aggregate sale price of approximately $560,000, during fiscal year 2010. The Company’s dispositions during fiscal 2011 and 2010 are detailed below.

2011 Annual Report F-20

NOTE 10 • continued

Fiscal 2011 (May 1, 2010 to April 30, 2011)

	(in thousands)
Dispositions	Sales Price		Book Value and Sales Cost		Gain/(Loss)
Multi-Family Residential
504 unit - Dakota Hill at Valley Ranch - Irving, TX	$	36,100	$	30,909	$	5,191
192 unit - Neighborhood Apartments - Colorado Springs, CO		11,200		9,664		1,536
195 unit - Pinecone Apartments - Fort Collins, CO		15,875		10,422		5,453
210 unit - Miramont Apartments - Fort Collins, CO		17,200		10,732		6,468
		80,375		61,727		18,648
Commercial Medical
1,410 sq. ft. Edgewood Vista Patio Home 4330 - Fargo, ND		205		220		(15	)
Commercial Industrial
29,440 sq. ft. Waconia Industrial Building - Waconia, MN		2,300		1,561		739
Commercial Retail
41,000 sq. ft. Ladysmith Pamida - Ladysmith, WI		450		457		(7	)
Total Property Dispositions	$	83,330	$	63,965	$	19,365

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 Apartments - 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

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.

2011 Annual Report F-21

NOTE 11 • continued

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, 2011, 2010 and 2009 from our five reportable segments, and reconcile net operating income of reportable segments to net income as reported in the consolidated financial statements. Segment assets are also reconciled to Total Assets as reported in the consolidated financial statements.

	(in thousands)
Year Ended April 30, 2011	Multi-Family  Residential			Commercial Office		Commercial Medical		Commercial Industrial		Commercial Retail		Total
Real estate revenue		$	66,838	$	77,747	$	66,048	$	13,165	$	13,387	$	237,185
Real estate expenses			34,129		36,055		22,466		4,328		4,932		101,910
Net operating income		$	32,709	$	41,692	$	43,582	$	8,837	$	8,455		135,275
Depreciation/amortization													(58,488	)
Administrative, advisory and trustee services													(7,222	)
Other expenses													(1,774	)
Interest expense													(63,941	)
Interest and other income													541
Income from continuing operations													4,391
Income from discontinued operations													19,960
Net income												$	24,351

	(in thousands)
Year Ended April 30, 2010	Multi-Family  Residential			Commercial Office		Commercial Medical		Commercial Industrial		Commercial Retail		Total
Real estate revenue		$	65,478	$	82,079	$	57,439	$	13,095	$	13,224	$	231,315
Real estate expenses			32,615		36,833		17,904		4,121		4,805		96,278
Gain on involuntary conversion			1,660		0		0		0		0		1,660
Net operating income		$	34,523	$	45,246	$	39,535	$	8,974	$	8,419		136,697
Depreciation/amortization													(57,416	)
Administrative, advisory and trustee services													(6,218	)
Other expenses													(2,513	)
Impairment of real estate investment													(708	)
Interest expense													(65,581	)
Interest and other income													894
Income from continuing operations													5,155
Loss from discontinued operations													(570	)
Net income												$	4,585

	(in thousands)
Year Ended April 30, 2009	Multi-Family  Residential			Commercial Office		Commercial Medical		Commercial Industrial		Commercial Retail		Total
Real estate revenue		$	65,632	$	83,446	$	52,547	$	12,488	$	14,207	$	228,320
Real estate expenses			31,315		37,644		16,046		3,142		5,053		93,200
Net operating income		$	34,317	$	45,802	$	36,501	$	9,346	$	9,154		135,120
Depreciation/amortization													(54,395	)
Administrative, advisory and trustee fees													(4,882	)
Other expenses													(1,440	)
Interest expense													(64,928	)
Interest and other income													913
Income from continuing operations													10,388
Income from discontinued operations													325
Net income													10,713

2011 Annual Report F-22

NOTE 11 • continued

Segment Assets and Accumulated Depreciation

	(in thousands)
As of April 30, 2011	Multi-Family  Residential				Commercial Office			Commercial Medical			Commercial Industrial			Commercial Retail			Total
Segment assets
Property owned		$	484,815		$	595,491		$	447,831		$	117,602		$	125,059		$	1,770,798
Less accumulated depreciation			(117,718	)		(104,650	)		(65,367	)		(17,713	)		(23,504	)		(328,952	)
Total property owned		$	367,097		$	490,841		$	382,464		$	99,889		$	101,555		$	1,441,846
Cash and cash equivalents																		41,191
Marketable securities – available-for-sale																		625
Receivables and other assets																		115,302
Development in progress																		9,693
Unimproved land																		6,550
Mortgage loans receivable, net of allowance																		156
Total Assets																	$	1,615,363

	(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

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, 2011, 2010 and 2009. 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, 2011, 2010 and 2009.  The financial statements have been restated to reflect the property sold during the six months ended October 31, 2011.  During the second quarter of fiscal year 2012 the Company sold a retail property in Livingston, Montana.

2011 Annual Report F-23

NOTE 12 • continued

	(in thousands)
	2011			2010			2009
REVENUE
Real estate rentals	$	6,123		$	11,393		$	11,605
Tenant reimbursement		36			67			80
TOTAL REVENUE		6,159			11,460			11,685
EXPENSES
Depreciation/amortization related to real estate investments		1,182			2,339			2,311
Utilities		558			957			863
Maintenance		708			1,236			1,172
Real estate taxes		638			1,319			1,366
Insurance		110			290			187
Property management expenses		856			1,461			1,363
Other expenses		1			0			0
Amortization related to non-real estate investments		4			8			8
Impairment of real estate investments		0			970			338
TOTAL EXPENSES		4,057			8,580			7,608
Interest expense		(1,512	)		(3,525	)		(3,815	)
Interest income		5			7			9
Income (loss) from discontinued operations before gain on sale		595			(638	)		271
Gain on sale of discontinued operations		19,365			68			54
INCOME (LOSS) FROM DISCONTINUED OPERATIONS	$	19,960		$	(570	)	$	325
Segment Data
Multi-Family Residential	$	19,224		$	437		$	560
Commercial Office		0			(169	)		(338	)
Commercial Medical		(8	)		14			11
Commercial Industrial		726			(23	)		(12	)
Commercial Retail		18			(829	)		104
Total	$	19,960		$	(570	)	$	325

	(in thousands)
	2011			2010			2009
Property Sale Data
Sales price	$	83,330		$	560		$	70
Net book value and sales costs		(63,965	)		(492	)		(16	)
Gain on sale of discontinued operations	$	19,365		$	68		$	54

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. Units can be exchanged for shares on a one-for-one basis after a minimum holding period of one year. 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 statements for the fiscal years ended April 30, 2011, 2010 and 2009:

2011 Annual Report F-24

NOTE 13 • continued

	For Years Ended April 30,
	(in thousands, except per share data)
	2011			2010			2009
NUMERATOR
Income from continuing operations – Investors Real Estate Trust	$	4,116		$	4,444		$	8,284
Income (loss) from discontinued operations – Investors Real Estate Trust		15,966			(443	)		242
Net income attributable to Investors Real Estate Trust		20,082			4,001			8,526
Dividends to preferred shareholders		(2,372	)		(2,372	)		(2,372	)
Numerator for basic earnings per share – net income available to common shareholders		17,710			1,629			6,154
Noncontrolling interests – Operating Partnership		4,449			562			2,227
Numerator for diluted earnings per share	$	22,159		$	2,191		$	8,381
DENOMINATOR
Denominator for basic earnings per share weighted average shares		78,628			69,093			58,603
Effect of convertible operating partnership units		20,154			20,825			21,217
Denominator for diluted earnings per share		98,782			89,918			79,820
Earnings per common share from continuing operations – Investors Real Estate Trust – basic and diluted	$	.02		$	.04		$	.10
Earnings (loss) per common share from discontinued operations – Investors Real Estate Trust – basic and diluted		.20			(.01	)		.01
NET INCOME PER COMMON SHARE – BASIC & DILUTED	$	.22		$	.03		$	.11

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 $598,000 in fiscal year 2011, $400,000 in fiscal year 2010 and $356,000 in fiscal year 2009.

NOTE 15 • COMMITMENTS AND CONTINGENCIES

Ground Leases. As of April 30, 2011, 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 1.3 to 90 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, 2011 is as follows:

	(in thousands)
Year Ended April 30,	Lease Payments
2012		$	501
2013			499
2014			500
2015			501
2016			473
Thereafter			22,486
Total		$	24,960

2011 Annual Report F-25

NOTE 15 • continued

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 recorded 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, 2011, the Company is committed to fund approximately $5.1 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:

2011 Annual Report F-26

NOTE 15 • continued

	(in thousands)
			Gross Rental Revenue
Property	Investment Cost		2011		2010		2009
Billings 2300 Grant Road - Billings, MT	$	2,522	$	226	$	0	$	0
Edgewood Vista-Belgrade, MT		2,135		191		196		196
Edgewood Vista-Billings, MT		4,274		384		396		396
Edgewood Vista-Bismarck, ND		10,903		1,031		1,008		1,008
Edgewood Vista-Brainerd, MN		10,667		1,010		988		988
Edgewood Vista-Columbus, NE		1,481		131		136		136
Edgewood Vista-East Grand Forks, MN		4,996		475		465		464
Edgewood Vista-Fargo, ND		26,087		2,415		2,387		2,065
Edgewood Vista-Fremont, NE		588		72		72		72
Edgewood Vista-Grand Island, NE		1,431		129		132		132
Edgewood Vista-Hastings, NE		606		76		76		76
Edgewood Vista-Hermantown I, MN		21,510		2,404		2,359		2,040
Edgewood Vista-Hermantown II, MN		12,359		1,170		1,144		1,144
Edgewood Vista-Kalispell, MT		624		76		76		76
Edgewood Vista-Missoula, MT		999		96		96		96
Edgewood Vista-Norfolk, NE		1,332		122		124		124
Edgewood Vista-Omaha, NE		676		80		80		80
Edgewood Vista-Sioux Falls, SD		3,353		312		312		312
Edgewood Vista-Spearfish, SD		9,569		642		628		628
Edgewood Vista-Virginia, MN		17,132		2,054		2,008		1,736
Fargo 1320 45th Street N - Fargo, ND		4,160		333		0		0
Great Plains - Fargo, ND		15,375		1,876		1,876		1,876
Healtheast St John & Woodwinds - Maplewood & Woodbury, MN		21,601		2,152		2,152		2,052
Minnesota National Bank - Duluth, MN		1,745		105		164		211
Missoula 3050 Great Northern - Missoula, MT		2,723		243		0		0
Sartell 2000 23rd Street South - Sartell, MN		12,693		1,209		1,173		1,292
St. Michael Clinic - St. Michael, MN		2,851		244		241		240
Stevens Point - Stevens Point, WI		15,020		1,104		1,356		1,356
Total	$	209,412	$	20,362	$	19,645	$	18,796

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 136 of the Company’s properties, consisting of approximately 7.5 million square feet of our combined commercial segment’s properties and 3,888 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 $854.6 million at April 30, 2011. 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 materially 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

2011 Annual Report F-27

NOTE 15 • continued

for the ten consecutive trading days immediately preceding the date of valuation of the Unit.  As of April 30, 2011 and 2010, the aggregate redemption value of the then-outstanding UPREIT Units of the operating partnership owned by limited partners was approximately $188.0 million and $180.3 million, respectively.

Joint Venture Buy/Sell Options.  Certain of IRET’s 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 the Company buy its partners’ interests. IRET has one joint venture which allows IRET’s unaffiliated partner, at its election, to require that IRET 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 the consolidated balance sheets at the greater of their carrying amount or redemption value at the end of each reporting period. The Company has 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 the unaffiliated partner requiring IRET to buy their interest is not currently determinable.

Pending Acquisitions.  As of April 30, 2011, the Company had signed purchase agreements to acquire the following properties; all of these pending acquisitions are subject to various closing conditions and contingencies, and no assurances can be given that any of these acquisitions will be completed:

A 147-unit multi-family residential property in St. Cloud, Minnesota for a purchase price totaling approximately $10.9 million, of which approximately $7.2 million would consist of the assumption of existing debt, with the remaining approximately $3.7 million paid in cash (approximately $2.2 million) and by the issuance of limited partnership units of the Operating Partnership valued at approximately $1.5 million; and

Six senior housing projects located in Boise, Idaho and towns surrounding Boise, with a total of approximately 209 units, for a total purchase price of approximately $29.5 million.  The Company has solicited multiple offers for debt placement and currently expects that this acquisition will close in the second quarter of the current fiscal year.

Development Projects.   The Company has various contracts outstanding with third parties in connection with ongoing development projects.  As of April 30, 2011, contractual commitments for development projects are as follows:

Multi-Family Conversion, Minot, North Dakota: The Company is planning to convert an existing approximately 15,000 square foot commercial office building in Minot, North Dakota to a 24-unit multi-family residential property, for an estimated total cost of $2.2 million. As of April 30, 2011, the Company had incurred approximately $280,000 of these project costs. Work on this project has been postponed, as Company employees and other resources are directed to the supervision of repairs at Company properties damaged by the recent flooding in Minot, North Dakota.

Buffalo Mall Theaters, Jamestown, North Dakota: The Company committed to fund the construction of six movie theaters at its existing Buffalo Mall property in Jamestown, North Dakota, for an estimated construction cost of $2.1 million and expected completion in the first quarter of fiscal year 2012.  As of April 30, 2011, the Company had incurred approximately $1.5 million of these construction costs. A certificate of occupancy was issued for this project in June 2011.

Senior Housing Memory Care Conversion and Additional Assisted Living Units, Wyoming: The Company has committed and funded construction and remodeling costs to convert a portion of  the Company’s existing Wyoming senior housing facility at Cheyenne, Wyoming to incorporate a specialized memory care unit. In the third quarter of fiscal year 2011, the Company had incurred $309,000, the total expected cost of the memory-care conversion.  A certificate of occupancy for the memory care unit was issued in March 2011. Additionally, the Company is currently constructing an additional approximately 28 assisted living units and 16 memory care units at its existing Meadow Wind senior housing facility in Casper, Wyoming. The Company estimates that construction costs for this expansion project will total approximately $4.5 million and the project will be completed in the second quarter of fiscal year 2012.

2011 Annual Report F-28

NOTE 15 • continued

Trinity Hospital Build-to-Suit, Minot, North Dakota: The Company has committed to construct an approximately 25,000 square-foot, one-story medical clinic for Trinity Health, a non-profit healthcare organization based in Minot, North Dakota, on land owned by the Company adjacent to the Company’s existing headquarters building in Minot. Construction of this build-to-suit facility began in the second quarter of fiscal year 2011, with completion and occupancy by Trinity expected in the second quarter of fiscal year 2012.  Estimated total project costs (excluding the value of the land) are $7.4 million, of which, as of April 30, 2011, the Company had incurred approximately $4.8 million.

In addition to the above contractually committed development projects, the Company is also renovating and upgrading the eight existing condominium units at its Georgetown Square Condominium project in Grand Chute, Wisconsin (formerly known as Fox River).  The Company is evaluating the construction of additional units, based on market needs.  The Company estimates total renovation costs for the existing eight units at a maximum of $280,000.

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.

Lines of Credit.  The carrying amount approximates fair value because the variable rate debt re-prices frequently.

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, 2011 and 2010, are as follows:

	(in thousands)
	2011				2010
	Carrying  Amount		Fair Value		Carrying  Amount		Fair Value
FINANCIAL ASSETS
Mortgage loans receivable	$	156	$	156	$	158	$	158
Cash and cash equivalents		41,191		41,191		54,791		54,791
Marketable securities - available-for-sale		625		625		420		420
FINANCIAL LIABILITIES
Other debt		8,200		7,279		1,000		1,142
Lines of credit		30,000		30,000		6,550		6,550
Mortgages payable		993,803		1,013,713		1,057,619		1,015,879

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

Distribution Reinvestment and Share Purchase Plan.  During fiscal years 2011 and 2010, IRET issued 1.7 million and 1.4 million common shares, respectively, pursuant to its distribution reinvestment and share purchase plan, at a total value at issuance of $14.5 million and $11.9 million, respectively. The shares issued under the distribution reinvestment and share purchase plan during fiscal year 2011 consisted of 1.3 million shares valued at issuance at $11.4 million that were issued for reinvested distributions and approximately 372,000 shares valued at $3.1 million

2011 Annual Report F-29

NOTE 17 • continued

at issuance that were sold for voluntary cash contributions. 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. 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 2011 and 2010, respectively, approximately 1.0 million and 707,000 Units were converted to common shares, with a total value of $6.9 million and $3.8 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.

During fiscal year 2011, the Company sold 1.8 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 $15.0 million, before offering expenses but after underwriting discounts and commissions.  As of April 30, 2011, the Company had available securities under this registration statement in the aggregate amount of approximately $18.2 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 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 shares 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, 2010		October 31, 2010		January 31, 2011		April 30, 2011
Total revenue as previously reported	$	59,176	$	58,904	$	60,203	$	59,124
Reclassified to discontinued operations	$	51	$	57	$	57	$	57
Adjusted total revenues	$	59,125	$	58,847	$	60,146	$	59,067
Net Income available to common shareholders	$	1,393	$	5,226	$	11,240	$	(149	)
Net Income per common share - basic & diluted	$	.02	$	.07	$	.14	$	(.01	)

2011 Annual Report F-30

NOTE 18 • continued

	(in thousands, except per share data)
QUARTER ENDED	July 31, 2009		October 31, 2009			January 31, 2010			April 30, 2010
Total revenue as previously reported	$	58,009	$	56,758		$	57,335		$	59,409
Reclassified to discontinued operations	$	49	$	49		$	49		$	49
Adjusted total revenues	$	57,960	$	56,709		$	57,286		$	59,360
Net Income available to common shareholders	$	1,424	$	(308	)	$	(141	)	$	654
Net Income per common share - basic & diluted	$	.02	$	.00		$	.00		$	.01

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, 2011, 2010 and 2009, the estimated redemption value of the redeemable noncontrolling interests was $987,000, $1.8 million and $1.7 million, respectively.  Below is a table reflecting the activity of the redeemable noncontrolling interests.

	(in thousands)
	2011			2010			2009
Balance at beginning of fiscal year	$	1,812		$	1,737		$	1,802
Net income		(13	)		60			53
Net distributions		(442	)		(177	)		(112	)
Mark-to-market adjustments		(370	)		192			(6	)
Balance at close of fiscal year	$	987		$	1,812		$	1,737

NOTE 20 • SUBSEQUENT EVENTS

Common and Preferred Share Distributions. On June 30, 2011, 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, 2011. On July 1, 2011, 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, 2011. Subsequent to the end of fiscal year 2011, the Company’s Board of Trustees approved a plan to reduce the Company’s quarterly distribution to $0.1300 from $0.1715 per common share and limited partnership unit, effective with the next quarterly distribution planned for October 3, 2011.  The Board currently intends to maintain this level of cash distribution for at least the next four quarters.  All future distributions remain subject to the discretion of the Company’s Board of Trustees.

Pending Acquisitions.  Subsequent to the end of fiscal year 2011, the Company signed purchase agreements to acquire the following properties; all of these pending acquisitions are subject to various closing conditions and contingencies, and no assurances can be given that any of these acquisitions will be completed:

Two multi-family residential projects in Billings, Montana with a total of 36 units, for a purchase price totaling approximately $2.1 million, of which approximately $2.0 million would be paid through the issuance of limited partnership units of the Operating Partnership; and

Two multi-family residential properties in Sioux Falls, South Dakota, with 50 units and 24 units, respectively, for purchase prices of $4.7 million and $2.3 million, respectively, to be paid in cash.

Subsequent to the end of fiscal year 2011, the Company terminated its previously-disclosed agreement for the purchase of a retail property located in Robbinsdale, Minnesota.

2011 Annual Report F-31

NOTE 20 • continued

Development Project.  In addition to the ongoing development projects discussed in Note 15 above, subsequent to the end of fiscal year 2011, in June 2011, the Company commenced construction on an approximately 159-unit apartment project in Rochester, Minnesota, located adjacent to its existing Quarry Ridge Apartment Homes.  The Company currently estimates that construction costs will total approximately $19.4 million, and that the project will be completed in approximately 14 months.

Flood Damage. The Company has two properties in Minot, North Dakota that were directly affected by the recent extensive Souris River flooding.  The Company’s Arrowhead Shopping Center and Chateau Apartments were flooded in late June 2011. The Company carries flood insurance covering both properties, with a total deductible of $200,000.  The approximately 78,095 net rentable square foot Arrowhead Shopping Center has an investment cost (initial cost plus improvements) of approximately $7.2 million, and was 100.0% occupied as of April 30, 2011.  The building is insured for $7.5 million in building value, plus an additional $250,000 or 20% of the amount of damage from which such costs resulted, whichever is greater, for debris removal.  Additionally, the Company is insured for loss of rents at the property for one year.  Total gross revenue from the Arrowhead Shopping Center in fiscal year 2011 was approximately $711,000.

The 64-unit Chateau Apartment building has an investment cost of approximately $3.6 million, and was 98.4% occupied as of April 30, 2011.  The building is insured for $4.5 million in building value, plus an additional $250,000 or 20% of the amount of damage from which such costs resulted, whichever is greater, for debris removal.  Additionally, the Company is insured for loss of rents at the property for one year.  Total gross revenue from the Chateau Apartments in fiscal year 2011 was approximately $648,000.  The Company had been in the process of refinancing its mortgage on the Chateau Apartment property, which matured on July 1, 2011; the Company instead paid off the $1.7 million mortgage using available cash.

The Company continues to monitor closely its Cottonwood and Westwood Apartments in Bismarck, North Dakota, both of which have been sandbagged as the Missouri River in Bismarck continues at high levels in June and July 2011.  The Company’s Arbor Apartments in South Sioux City, Nebraska are also being closely monitored, as Missouri River flood risk continues there.  The Company currently does not expect material financial or operational disruptions due to these above-described flood incidents and flood risk.

  2011 Annual Report F-32

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

April 30, 2011

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

			Initial Cost to Company						Gross amount at which carried at close of period
Description	Encumbrances(a)		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
11th Street 3 Plex - Minot, ND	$	0	$	11	$	53	$	5	$	11	$	58	$	69	$	(4)		2008	40 years
4th Street 4 Plex - Minot, ND		0		15		74		1		15		75		90		(6)		2008	40 years
Apartments on Main - Minot, ND		0		158		1,123		18		175		1,124		1,299		(91)		1987	24-40 years
Arbors - S Sioux City, NE		4,143		350		6,625		941		584		7,332		7,916		(1,008)		2006	40 years
Boulder Court - Eagan, MN		3,675		1,067		5,498		2,389		1,277		7,677		8,954		(1,476)		2003	40 years
Brookfield Village - Topeka, KS		5,534		509		6,698		1,067		600		7,674		8,274		(1,503)		2003	40 years
Brooklyn Heights - Minot, ND		893		145		1,450		688		198		2,085		2,283		(722)		1997	12-40 years
Campus Center - St. Cloud, MN		1,417		395		2,244		115		398		2,356		2,754		(253)		2007	40 years
Campus Heights - St. Cloud, MN		0		110		628		32		112		658		770		(72)		2007	40 years
Campus Knoll - St. Cloud, MN		944		266		1,512		58		271		1,565		1,836		(172)		2007	40 years
Campus Plaza - St. Cloud, MN(1)		0		54		311		26		55		336		391		(37)		2007	40 years
Campus Side - St. Cloud, MN(1)		0		107		615		62		114		670		784		(73)		2007	40 years
Campus View - St. Cloud, MN(1)		0		107		615		48		109		661		770		(71)		2007	40 years
Candlelight - Fargo, ND		1,315		80		758		1,048		221		1,665		1,886		(745)		1992	24-40 years
Canyon Lake - Rapid City, SD		2,593		305		3,958		575		328		4,510		4,838		(1,063)		2001	40 years
Castlerock - Billings, MT		6,947		736		4,864		1,486		860		6,226		7,086		(1,997)		1998	40 years
Chateau - Minot, ND		1,730		122		2,224		1,297		169		3,474		3,643		(1,044)		1998	12-40 years
Cimarron Hills - Omaha, NE		5,010		706		9,588		3,732		1,192		12,834		14,026		(3,444)		2001	40 years
Colonial Villa - Burnsville, MN		7,350		2,401		11,515		2,799		2,708		14,007		16,715		(2,922)		2003	40 years
Colton Heights - Minot, ND		502		80		672		322		113		961		1,074		(634)		1984	40 years
Cornerstone - St. Cloud, MN(1)		0		54		311		31		55		341		396		(37)		2007	40 years
Cottonwood - Bismarck, ND		16,373		1,056		17,372		2,524		1,292		19,660		20,952		(4,748)		1997	40 years
Country Meadows - Billings, MT		6,990		491		7,809		963		527		8,736		9,263		(2,722)		1995	33-40 years
Crestview - Bismarck, ND		4,123		235		4,290		892		464		4,953		5,417		(2,278)		1994	24-40 years
Crown - Rochester, MN		2,520		261		3,289		40		261		3,329		3,590		(87)		2010	40 years
Crown Colony - Topeka, KS		8,588		620		9,956		1,722		759		11,539		12,298		(3,294)		1999	40 years
East Park - Sioux Falls, SD		1,530		115		2,405		605		155		2,970		3,125		(735)		2002	40 years
Evergreen - Isanti, MN		2,105		380		2,720		58		380		2,778		3,158		(182)		2008	40 years
Fairmont - Minot, ND		0		28		337		9		28		346		374		(26)		2008	40 years
Forest Park - Grand Forks, ND		8,044		810		5,579		5,647		1,296		10,740		12,036		(3,826)		1993	24-40 years
Greenfield - Omaha, NE		3,650		578		4,122		401		730		4,371		5,101		(376)		2007	40 years
Heritage Manor - Rochester, MN		4,470		403		6,968		1,899		451		8,819		9,270		(2,782)		1998	40 years

  2011 Annual Report F-33

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

April 30, 2011

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

			Initial Cost to Company						Gross amount at which carried at close of period
Description	Encumbrances(a)		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
Indian Hills - Sioux City, IA(1)	$	0	$	294	$	2,921	$	2,686	$	365	$	5,536	$	5,901	$	(576)		2007	40 years
Kirkwood Manor - Bismarck, ND		3,451		449		2,725		1,254		537		3,891		4,428		(1,358)		1997	12-40 years
Lancaster - St. Cloud, MN		981		289		2,899		773		437		3,524		3,961		(1,098)		2000	40 years
Landmark - Grand Forks, ND		1,815		184		1,514		829		273		2,254		2,527		(765)		1997	40 years
Legacy - Grand Forks, ND		16,841		1,362		21,727		5,168		2,018		26,239		28,257		(7,108)		1995-2005	24-40 years
Mariposa - Topeka, KS		3,110		399		5,110		310		419		5,400		5,819		(884)		2004	40 years
Monticello Village - Monticello, MN		3,023		490		3,756		355		612		3,989		4,601		(771)		2004	40 years
North Pointe - Bismarck, ND		2,051		303		3,957		226		320		4,166		4,486		(972)		1995-2011	24-40 years
Northern Valley - Rochester, MN		0		110		610		12		111		621		732		(16)		2010	40 years
Oakmont Estates - Sioux Falls, SD		3,605		423		4,838		333		495		5,099		5,594		(1,186)		2002	40 years
Oakwood Estates - Sioux Falls, SD		4,250		543		2,784		3,700		758		6,269		7,027		(2,579)		1993	40 years
Olympic Village - Billings, MT		11,298		1,164		10,441		1,795		1,433		11,967		13,400		(3,363)		2000	40 years
Olympik Village - Rochester, MN		4,815		1,034		6,109		1,131		1,116		7,158		8,274		(1,140)		2005	40 years
Oxbow Park - Sioux Falls, SD		4,150		404		3,152		2,277		478		5,355		5,833		(2,163)		1994	24-40 years
Park Meadows - Waite Park, MN		8,798		1,143		9,099		4,180		1,497		12,925		14,422		(5,094)		1997	40 years
Pebble Springs - Bismarck, ND(1)		0		7		748		92		39		808		847		(254)		1999	40 years
Pinehurst - Billings, MT		345		72		687		113		74		798		872		(195)		2002	40 years
Pines - Minot, ND		143		35		215		92		40		302		342		(103)		2002	40 years
Plaza - Minot, ND(1)		0		793		0		14,814		794		14,813		15,607		(865)		2009	40 years
Pointe West - Rapid City, SD		2,826		240		3,538		1,139		349		4,568		4,917		(1,926)		1994	24-40 years
Prairie Winds - Sioux Falls, SD		1,511		144		1,816		391		209		2,142		2,351		(997)		1993	24-40 years
Prairiewood Meadows - Fargo, ND		2,494		280		2,531		924		340		3,395		3,735		(955)		2000	40 years
Quarry Ridge - Rochester, MN		12,136		1,312		13,362		370		1,335		13,709		15,044		(1,604)		2006	40 years
Ridge Oaks - Sioux City, IA		0		178		4,073		1,935		256		5,930		6,186		(1,685)		2001	40 years
Rimrock West - Billings, MT		3,490		330		3,489		1,303		402		4,720		5,122		(1,212)		1999	40 years
Rocky Meadows - Billings, MT		5,411		656		5,726		805		750		6,437		7,187		(2,401)		1995	40 years
Rum River - Isanti, MN		3,801		843		4,823		40		844		4,862		5,706		(493)		2007	40 years
Sherwood - Topeka, KS		12,886		1,145		14,684		2,335		1,487		16,677		18,164		(4,834)		1999	40 years
Sierra Vista - Sioux Falls, SD		1,500		241		2,097		6		241		2,103		2,344		(11)		2011	40 years
South Pointe - Minot, ND		9,254		550		9,548		1,931		1,250		10,779		12,029		(4,109)		1995	24-40 years
Southview - Minot, ND(1)		0		185		469		266		219		701		920		(280)		1994	24-40 years
Southwind - Grand Forks, ND		5,910		400		5,034		2,082		706		6,810		7,516		(2,571)		1995	24-40 years
Summit Park - Minot, ND		1,238		161		1,898		824		241		2,642		2,883		(915)		1995	24-40 years

  2011 Annual Report F-34

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

April 30, 2011

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

			Initial Cost to Company						Gross amount at which carried at close of period
Description	Encumbrances(a)		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
Sunset Trail - Rochester, MN	$	8,480	$	336	$	12,814	$	2,045	$	493	$	14,702	$	15,195	$	(3,780)		1999	40 years
Sycamore Village - Sioux Falls, SD		861		101		1,317		424		149		1,693		1,842		(432)		2002	40 years
Temple - Minot, ND		0		0		0		224		0		224		224		(29)		2006	40 years
Terrace Heights - Minot, ND		206		29		312		82		38		385		423		(149)		2006	40 years
Terrace On The Green - Moorhead, MN		2,236		24		1,490		1,829		130		3,213		3,343		(2,216)		1970	33-40 years
The Meadows - Jamestown, ND(1)		943		590		4,519		1,035		639		5,505		6,144		(1,520)		1998	40 years
Thomasbrook - Lincoln, NE		6,237		600		10,306		2,693		1,065		12,534		13,599		(3,268)		1999	40 years
University Park Place - St. Cloud, MN(1)		0		78		450		35		78		485		563		(52)		2007	40 years
Valley Park - Grand Forks, ND		4,057		294		4,137		2,258		437		6,252		6,689		(1,873)		1999	40 years
Village Green - Rochester, MN		1,407		234		2,296		471		332		2,669		3,001		(540)		2003	40 years
West Stonehill - Waite Park, MN		9,077		939		10,167		4,052		1,216		13,942		15,158		(5,619)		1995	40 years
Westridge - Minot, ND		0		68		1,887		35		70		1,920		1,990		(144)		2008	40 years
Westwood Park - Bismarck, ND		2,068		116		1,909		1,597		239		3,383		3,622		(1,003)		1998	40 years
Winchester - Rochester, MN		3,444		748		5,622		1,222		990		6,602		7,592		(1,379)		2003	40 years
Woodridge - Rochester, MN		1,999		370		6,028		1,560		467		7,491		7,958		(2,801)		1997	40 years
Total Multi-Family Residential	$	272,594	$	33,445	$	345,817	$	105,553	$	42,696	$	442,119	$	484,815	$	(117,718)
Commercial Office
1st Avenue Building - Minot, ND	$	0	$	30	$	80	$	(37)	$	33	$	40	$	73	$	295		1981	33-40 years
2030 Cliff Road - Eagan, MN		0		146		835		90		158		913		1,071		(219)		2007	40 years
610 Business Center IV - Brooklyn Park, MN		7,234		975		5,542		2,886		980		8,423		9,403		(1,015)		2001	19-40 years
7800 West Brown Deer Road - Milwaukee, WI		11,054		1,455		8,756		2,031		1,475		10,767		12,242		(2,503)		2003	40 years
American Corporate Center - Mendota Heights, MN		9,116		893		16,768		3,516		893		20,284		21,177		(6,266)		2002	40 years
Ameritrade - Omaha, NE		3,533		327		7,957		65		327		8,022		8,349		(2,412)		1999	40 years
Benton Business Park - Sauk Rapids, MN		687		188		1,261		78		188		1,339		1,527		(285)		2003	40 years
Bismarck 715 East Broadway - Bismarck, ND		0		389		0		2,362		401		2,350		2,751		(119)		2008	40 years
Bloomington Business Plaza - Bloomington, MN		0		1,300		6,106		749		1,305		6,850		8,155		(1,976)		2001	40 years
Brenwood - Minnetonka, MN		0		1,688		12,138		3,264		1,697		15,393		17,090		(4,201)		2002	40 years
Brook Valley I - La Vista, NE		1,384		347		1,671		81		347		1,752		2,099		(252)		2005	40 years
Burnsville Bluffs II - Burnsville, MN		1,792		300		2,154		903		301		3,056		3,357		(998)		2001	40 years
Cold Spring Center - St. Cloud, MN		5,975		588		7,808		907		592		8,711		9,303		(2,402)		2001	40 years
Corporate Center West - Omaha, NE		17,315		3,880		17,509		303		4,167		17,525		21,692		(2,048)		2006	40 years

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

April 30, 2011

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

			Initial Cost to Company						Gross amount at which carried at close of period
Description	Encumbrances(a)		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	$	14,139	$	2,884	$	14,569	$	1,235	$	2,900	$	15,788	$	18,688	$	(2,543)		2004	40 years
Dewey Hill Business Center - Edina, MN		0		985		3,507		921		995		4,418		5,413		(1,399)		2000	40 years
Farnam Executive Center - Omaha, NE		12,160		2,188		11,404		0		2,188		11,404		13,592		(1,319)		2006	40 years
Flagship - Eden Prairie, MN		21,565		1,899		21,638		822		2,013		22,346		24,359		(2,817)		2006	40 years
Gateway Corporate Center - Woodbury, MN		8,700		1,637		7,763		90		1,637		7,853		9,490		(932)		2006	40 years
Golden Hills Office Center - Golden Valley, MN		18,500		3,018		18,325		3,424		3,018		21,749		24,767		(5,494)		2003	40 years
Great Plains - Fargo, ND		3,140		126		15,240		10		126		15,250		15,376		(4,464)		1997	40 years
Highlands Ranch I - Highlands Ranch, CO		8,640		2,268		8,362		428		2,268		8,790		11,058		(987)		2006	40 years
Highlands Ranch II - Highlands Ranch, CO		8,447		1,437		9,549		996		1,437		10,545		11,982		(1,995)		2004	40 years
Interlachen Corporate Center - Edina, MN		9,293		1,650		14,983		965		1,652		15,946		17,598		(3,786)		2001	40 years
Intertech Building - Fenton, MO		4,631		2,130		3,968		75		2,130		4,043		6,173		(355)		2007	40 years
IRET Corporate Plaza - Minot, ND(1)		0		389		5,444		3,433		590		8,676		9,266		(590)		2009	40 years
Mendota Office Center I - Mendota Heights, MN		3,925		835		6,169		367		835		6,536		7,371		(1,687)		2002	40 years
Mendota Office Center II - Mendota Heights, MN		5,800		1,121		10,085		1,461		1,121		11,546		12,667		(3,327)		2002	40 years
Mendota Office Center III - Mendota Heights, MN		3,986		970		5,734		253		970		5,987		6,957		(1,491)		2002	40 years
Mendota Office Center IV - Mendota Heights, MN		4,739		1,070		7,635		578		1,070		8,213		9,283		(2,077)		2002	40 years
Minnesota National Bank - Duluth, MN		917		287		1,454		4		288		1,457		1,745		(256)		2004	40 years
Minot 2505 16th Street SW - Minot, ND(1)		0		298		1,724		0		298		1,724		2,022		(66)		2009	40 years
Miracle Hills One - Omaha, NE		8,895		1,974		10,117		1,258		2,120		11,229		13,349		(1,662)		2006	40 years
Nicollett VII - Burnsville, MN		0		429		6,931		140		436		7,064		7,500		(1,785)		2001	40 years
Northgate I - Maple Grove, MN		5,504		1,062		6,358		832		1,077		7,175		8,252		(1,224)		2004	40 years
Northgate II - Maple Grove, MN		979		359		1,944		144		403		2,044		2,447		(625)		1999	40 years
Northpark Corporate Center - Arden Hills, MN		13,058		2,034		14,584		1,104		2,034		15,688		17,722		(2,119)		2006	40 years
Omaha 10802 Farnam Dr - Omaha, NE		5,507		2,462		4,374		0		2,462		4,374		6,836		(41)		2010	40 years
Pacific Hills - Omaha, NE		16,770		4,220		11,988		1,249		4,478		12,979		17,457		(1,684)		2006	40 years
Pillsbury Business Center - Bloomington, MN		0		284		1,556		120		284		1,676		1,960		(437)		2001	40 years
Plaza VII - Boise, ID		1,107		300		3,058		414		351		3,421		3,772		(828)		2003	40 years
Plymouth 5095 Nathan Lane - Plymouth, MN		1,274		604		1,253		40		604		1,293		1,897		(123)		2007	40 years
Plymouth I - Plymouth, MN		1,234		530		1,133		27		530		1,160		1,690		(208)		2004	40 years
Plymouth II - Plymouth, MN		1,234		367		1,264		41		367		1,305		1,672		(233)		2004	40 years
Plymouth III - Plymouth, MN		1,518		507		1,495		350		507		1,845		2,352		(345)		2004	40 years
Plymouth IV & V - Plymouth, MN		7,168		1,336		12,693		1,317		1,338		14,008		15,346		(3,823)		2001	40 years

  2011 Annual Report F-36

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

April 30, 2011

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

			Initial Cost to Company						Gross amount at which carried at close of period
Description	Encumbrances(a)		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
Prairie Oak Business Center - Eden Prairie, MN	$	3,466	$	531	$	4,069	$	1,468	$	563	$	5,505	$	6,068	$	(1,497)		2003	40 years
Rapid City 900 Concourse Drive - Rapid City, SD		2,014		285		6,600		276		321		6,840		7,161		(1,838)		2000	40 years
Riverport - Maryland Heights, MO		19,690		1,891		18,982		26		1,917		18,982		20,899		(2,197)		2006	40 years
Southeast Tech Center - Eagan, MN		1,762		560		5,496		352		569		5,839		6,408		(1,802)		1999	40 years
Spring Valley IV - Omaha, NE		824		178		916		60		186		968		1,154		(159)		2005	40 years
Spring Valley V - Omaha, NE		907		212		1,123		251		240		1,346		1,586		(203)		2005	40 years
Spring Valley X - Omaha, NE		841		180		1,024		32		180		1,056		1,236		(155)		2005	40 years
Spring Valley XI - Omaha, NE		824		143		1,094		35		151		1,121		1,272		(160)		2005	40 years
Superior Office Building - Duluth, MN		1,378		336		2,200		2		336		2,202		2,538		(388)		2004	40 years
TCA Building - Eagan, MN		7,968		627		8,571		807		684		9,321		10,005		(2,040)		2003	40 years
Three Paramount Plaza - Bloomington, MN(1)		0		1,261		6,149		1,825		1,298		7,937		9,235		(2,003)		2002	40 years
Thresher Square - Minneapolis, MN		0		1,094		10,026		1,678		1,104		11,694		12,798		(2,859)		2002	40 years
Timberlands - Leawood, KS		13,155		2,375		12,218		659		2,495		12,757		15,252		(1,759)		2006	40 years
UHC Office - International Falls, MN		1,168		119		2,366		80		119		2,446		2,565		(445)		2004	40 years
US Bank Financial Center - Bloomington, MN		14,016		3,117		13,350		580		3,119		13,928		17,047		(2,164)		2005	40 years
Viromed - Eden Prairie, MN		907		666		4,197		1		666		4,198		4,864		(1,281)		1999	40 years
Wells Fargo Center - St Cloud, MN		6,336		869		8,373		1,083		869		9,456		10,325		(1,512)		2005	40 years
West River Business Park - Waite Park, MN		687		235		1,195		47		235		1,242		1,477		(258)		2003	40 years
Westgate - Boise, ID		4,373		1,000		10,618		1,911		1,000		12,529		13,529		(2,627)		2003	40 years
Whitewater Plaza - Minnetonka, MN		3,965		530		4,860		716		577		5,529		6,106		(1,345)		2002	40 years
Wirth Corporate Center - Golden Valley, MN		3,777		970		7,659		868		971		8,526		9,497		(2,172)		2002	40 years
Woodlands Plaza IV - Maryland Heights, MO		4,360		771		4,609		741		837		5,284		6,121		(663)		2006	40 years
Total Commercial Office	$	343,338	$	72,116	$	470,581	$	52,794	$	73,828		521,663	$	595,491	$	(104,650)
Commercial Medical
2800 Medical Building - Minneapolis, MN	$	5,763	$	204	$	7,135	$	2,149	$	229	$	9,259	$	9,488	$	(1,582)		2005	40 years
2828 Chicago Avenue - Minneapolis, MN		8,669		726		11,319		5,628		729		16,944		17,673		(1,517)		2007	40 years
Airport Medical - Bloomington, MN		1,640		0		4,678		0		0		4,678		4,678		(1,263)		2002	40 years
Barry Pointe Office Park - Kansas City, MO		1,493		384		2,366		104		392		2,462		2,854		(259)		2007	40 years
Billings 2300 Grant Road - Billings, MT		1,976		649		1,216		0		649		1,216		1,865		(24)		2010	40 years
Burnsville 303 Nicollet Medical (Ridgeview) - Burnsville, MN		7,574		1,071		6,842		723		1,071		7,565		8,636		(591)		2008	40 years
Burnsville 305 Nicollet Medical (Ridgeview South) - Burnsville, MN		4,734		189		5,127		550		189		5,677		5,866		(466)		2008	40 years

  2011 Annual Report F-37

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

April 30, 2011

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

			Initial Cost to Company						Gross amount at which carried at close of period
Description	Encumbrances(a)		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 1930 E 12th Street (Park Place) - Casper, WY(1)	$	0	$	439	$	5,780	$	(47)	$	439	$	5,733	$	6,172	$	(196)		2009	40 years
Casper 3955 E 12th Street (Meadow Wind) - Casper, WY(1)		0		338		5,881		(2)		338		5,879		6,217		(202)		2009	40 years
Cheyenne 4010 N College Drive (Aspen Wind) - Cheyenne, WY(1)		0		628		9,869		(2)		628		9,867		10,495		(339)		2009	40 years
Cheyenne 4606 N College Drive (Sierra Hills) - Cheyenne, WY(1)		0		695		7,455		0		695		7,455		8,150		(256)		2009	40 years
Denfeld Clinic - Duluth, MN		1,859		501		2,597		1		501		2,598		3,099		(458)		2004	40 years
Eagan 1440 Duckwood Medical - Eagan, MN		1,894		521		1,547		519		521		2,066		2,587		(259)		2008	40 years
Edgewood Vista - Belgrade, MT		0		35		779		0		35		779		814		(61)		2008	40 years
Edgewood Vista - Billings, MT		2,026		115		1,782		(15)		115		1,767		1,882		(142)		2008	40 years
Edgewood Vista - Bismarck, ND		5,854		511		9,193		36		511		9,229		9,740		(1,296)		2005	40 years
Edgewood Vista - Brainerd, MN		5,786		587		8,999		34		587		9,033		9,620		(1,268)		2005	40 years
Edgewood Vista - Columbus, NE(1)		0		43		824		0		43		824		867		(64)		2008	40 years
Edgewood Vista - East Grand Forks, MN		3,087		290		1,383		(31)		290		1,352		1,642		(109)		2000	40 years
Edgewood Vista - Fargo, ND		13,720		775		20,870		0		775		20,870		21,645		(1,630)		2008	40 years
Edgewood Vista - Fremont, NE		624		56		490		42		56		532		588		(129)		2008	40 years
Edgewood Vista - Grand Island, NE(1)		0		33		773		0		33		773		806		(60)		2000	40 years
Edgewood Vista - Hastings, NE		643		49		517		41		49		558		607		(139)		2008	40 years
Edgewood Vista - Hermantown I, MN		17,251		288		9,871		1,501		288		11,372		11,660		(2,736)		2000	40 years
Edgewood Vista - Hermantown II, MN		6,705		719		10,517		33		719		10,550		11,269		(1,482)		2005	40 years
Edgewood Vista - Kalispell, MT		645		70		502		52		70		554		624		(135)		2001	40 years
Edgewood Vista - Minot, ND		9,865		1,046		11,590		0		1,046		11,590		12,636		(133)		2010	40 years
Edgewood Vista - Missoula, MT		916		109		854		36		109		890		999		(312)		1996	40 years
Edgewood Vista - Norfolk, NE(1)		0		42		722		0		42		722		764		(56)		2008	40 years
Edgewood Vista - Omaha, NE		408		89		547		40		89		587		676		(142)		2001	40 years
Edgewood Vista - Sioux Falls, SD		1,161		314		1,001		(27)		314		974		1,288		(79)		2008	40 years
Edgewood Vista - Spearfish, SD		3,645		315		8,584		35		315		8,619		8,934		(839)		2005	40 years
Edgewood Vista - Virginia, MN		14,674		246		11,823		76		246		11,899		12,145		(2,461)		2002	40 years
Edina 6363 France Medical - Edina, MN(1)		0		0		12,675		20		0		12,695		12,695		(1,397)		2008	40 years
Edina 6405 France Medical  - Edina, MN		9,347		0		12,201		0		0		12,201		12,201		(1,232)		2008	40 years
Edina 6517 Drew Avenue - Edina, MN		1,192		353		660		524		372		1,165		1,537		(341)		2002	40 years
Edina 6525 France SMC II - Edina, MN		10,500		755		8,054		5,945		1,003		13,751		14,754		(3,955)		2003	40 years
Edina 6545 France SMC I - Edina MN		31,836		3,480		30,743		11,020		3,480		41,763		45,243		(10,938)		2001	40 years
Fresenius - Duluth, MN		841		50		1,520		2		50		1,522		1,572		(268)		2004	40 years

    2011 Annual Report F-38

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

April 30, 2011

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

			Initial Cost to Company						Gross amount at which carried at close of period										Life on which depreciation in latest income statement is computed
Description	Encumbrances(a)		Land		Buildings & Improvements		Costs capitalized subsequent to acquisition		Land		Buildings & Improvements		Total		Accumulated Depreciation		Date of Construction or Acquisition
Commercial Medical - continued
Garden View - St. Paul, MN	$	2,270	$	0	$	7,408	$	484	$	0	$	7,892	$	7,892	$	(1,814)		2002	40 years
Gateway Clinic - Sandstone, MN		1,076		66		1,699		1		66		1,700		1,766		(299)		2004	40 years
Healtheast St John & Woodwinds - Maplewood & Woodbury, MN		12,678		3,239		18,362		0		3,239		18,362		21,601		(5,030)		2000	40 years
High Pointe Health Campus - Lake Elmo, MN		2,243		1,305		10,528		1,378		1,322		11,889		13,211		(2,023)		2004	40 years
Laramie 1072 N 22nd Street (Spring Wind) - Laramie, WY(1)		0		406		6,634		(2)		406		6,632		7,038		(228)		2009	40 years
Mariner Clinic - Superior, WI		2,354		0		3,781		21		20		3,782		3,802		(669)		2004	40 years
Minneapolis 701 25th Avenue Medical - Minneapolis, MN		6,580		0		7,873		0		0		7,873		7,873		(615)		2008	40 years
Missoula 3050 Great Northern - Missoula, MT		2,092		640		1,331		0		640		1,331		1,971		(26)		2010	40 years
Nebraska Orthopedic Hospital - Omaha, NE		12,780		0		20,272		1,526		0		21,798		21,798		(3,588)		2004	40 years
Park Dental - Brooklyn Center, MN		940		185		2,767		0		185		2,767		2,952		(597)		2002	40 years
Pavilion I - Duluth, MN		6,203		1,245		8,898		31		1,245		8,929		10,174		(1,541)		2004	40 years
Pavilion II - Duluth, MN		11,414		2,715		14,673		1,939		2,717		16,610		19,327		(3,691)		2004	40 years
Ritchie Medical Plaza - St Paul, MN		6,898		1,615		7,851		943		1,647		8,762		10,409		(1,306)		2005	40 years
Sartell 2000 23rd Street South - Sartell, MN		4,684		0		11,781		912		0		12,693		12,693		(2,810)		2002	40 years
St Michael Clinic - St Michael, MN		1,996		328		2,259		264		328		2,523		2,851		(257)		2007	40 years
Stevens Point - Stevens Point, WI		10,170		442		3,888		10,495		442		14,383		14,825		(1,618)		2006	40 years
Wells Clinic - Hibbing, MN		1,642		162		2,497		1		162		2,498		2,660		(439)		2004	40 years
Total Commercial Medical	$	262,348	$	29,063	$	371,788	$	46,980	$	29,437		418,394	$	447,831	$	(65,367)
Commercial Industrial
API Building - Duluth, MN	$	934	$	115	$	1,605	$	3	$	115	$	1,608	$	1,723	$	(283)		2004	40 years
Bloomington 2000 W 94th Street - Bloomington, MN		3,890		2,133		4,097		993		2,133		5,090		7,223		(533)		2006	40 years
Bodycote Industrial Building - Eden Prairie, MN		1,186		198		1,154		800		198		1,954		2,152		(760)		1992	40 years
Brooklyn Park 7401 Boone Avenue - Brooklyn Park, MN		6,571		1,368		11,643		1,780		1,368		13,423		14,791		(2,861)		2007	40 years
Cedar Lake Business Center - St. Louis Park, MN		2,389		895		2,810		50		895		2,860		3,755		(285)		2009	40 years
Clive 2075 NW 94th Street - Clive, IA		2,250		408		2,611		48		408		2,659		3,067		(113)		2002	40 years
Dixon Avenue Industrial Park - Des Moines, IA		7,296		1,439		10,758		1,102		1,439		11,860		13,299		(2,823)		2008	40 years
Eagan 2785 & 2795 Highway 55 - Eagan, MN		3,624		3,058		2,570		0		3,058		2,570		5,628		(208)		1999	40 years
Fargo 1320 45th Street N - Fargo, ND(1)		0		395		3,518		246		395		3,764		4,159		(78)		2010	40 years
Lexington Commerce Center - Eagan, MN		2,447		453		4,352		1,833		480		6,158		6,638		(1,993)		2004	40 years
Lighthouse - Duluth, MN		981		90		1,788		7		90		1,795		1,885		(318)		2002	40 years
Metal Improvement Company - New Brighton, MN		1,557		240		2,189		78		240		2,267		2,507		(526)		2009	40 years

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

April 30, 2011

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

			Initial Cost to Company							Gross amount at which carried at close of period										Life on which depreciation in latest income statement is computed
Description	Encumbrances(a)		Land		Buildings & Improvements			Costs capitalized subsequent to acquisition		Land		Buildings & Improvements		Total		Accumulated Depreciation		Date of Construction or Acquisition
Commercial Industrial - continued
Minnetonka 13600 County Road 62 - Minnetonka, MN	$	2,412	$	809	$		434	$	2,459	$	809	$	2,893	$	3,702	$	(163)		2006	40 years
Roseville 2929 Long Lake Road - Roseville, MN		5,721		1,966			7,272		1,483		1,980		8,741		10,721		(985)		1995	40 years
Stone Container - Fargo, ND		2,334		440			6,597		104		440		6,701		7,141		(2,273)		2001	40 years
Stone Container - Roseville, MN		3,743		810			7,440		32		810		7,472		8,282		(1,744)		2007	40 years
Urbandale 3900 106th Street - Urbandale, IA		10,800		3,680			10,089		493		3,721		10,541		14,262		(1,106)		2000	40 years
Winsted Industrial Building - Winsted, MN		411		100			901		48		100		949		1,049		(282)		2001	40 years
Woodbury 1865 Woodlane - Woodbury, MN		2,810		1,108			2,628		1,882		1,121		4,497		5,618		(379)		2007	40 years
Total Commercial Industrial	$	61,356	$	19,705	$		84,456	$	13,441	$	19,800		97,802	$	117,602	$	(17,713)
Commercial Retail
17 South Main - Minot, ND	$	0	$	15		$	75	$	197	$	17	$	270	$	287	$	(175)		2000	40 years
Anoka Strip Center - Anoka, MN		0		123			602		25		134		616		750		(127)		2003	40 years
Burnsville 1 Strip Center - Burnsville, MN		461		208			773		208		208		981		1,189		(200)		2003	40 years
Burnsville 2 Strip Center - Burnsville, MN		366		291			469		214		294		680		974		(148)		2003	40 years
Champlin South Pond - Champlin, MN		1,729		842			2,703		48		866		2,727		3,593		(502)		2004	40 years
Chan West Village - Chanhassen, MN		13,722		5,035			14,665		1,734		5,606		15,828		21,434		(3,410)		2003	40 years
Dakota West Plaza - Minot , ND		379		92			493		28		106		507		613		(66)		2006	40 years
Duluth Denfeld Retail - Duluth, MN		2,624		276			4,699		62		276		4,761		5,037		(839)		2004	40 years
Duluth NAPA - Duluth, MN		794		130			1,800		4		131		1,803		1,934		(317)		2004	40 years
Eagan Community - Eagan, MN		1,399		702			1,588		858		703		2,445		3,148		(488)		2003	40 years
East Grand Station - East Grand Forks, MN		110		150			1,235		314		151		1,548		1,699		(392)		1999	40 years
Fargo Express Community - Fargo, ND		1,041		374			1,420		126		386		1,534		1,920		(298)		2003-2005	40 years
Forest Lake Auto - Forest Lake, MN(1)		0		50			446		13		50		459		509		(97)		2003	40 years
Forest Lake Westlake Center - Forest Lake, MN		4,473		2,446			5,304		458		2,480		5,728		8,208		(1,188)		2003	40 years
Grand Forks Carmike - Grand Forks, ND		1,753		184			2,360		2		184		2,362		2,546		(974)		1994	40 years
Grand Forks Medpark Mall - Grand Forks, ND		3,132		681			4,808		218		722		4,985		5,707		(1,416)		2000	40 years
Jamestown Buffalo Mall - Jamestown, ND(2)		1,058		566			3,209		2,457		871		5,361		6,232		(997)		2003	40 years
Jamestown Business Center - Jamestown, ND		590		297			1,023		1,312		333		2,299		2,632		(616)		2003	40 years
Kalispell Retail Center - Kalispell, MT		1,419		250			2,250		972		253		3,219		3,472		(603)		2003	40 years
Kentwood Thomasville Furniture - Kentwood, MI		0		225			1,889		(698)		225		1,191		1,416		(647)		1996	40 years
Lakeville Strip Center - Lakeville, MN		1,036		46			1,142		827		94		1,921		2,015		(490)		2003	40 years
Livingston Pamida - Livingston, MT		1,195		227			1,573		0		227		1,573		1,800		(323)		2003	40 years
Minot 1400 31st Ave - Minot, ND		0		1,026			6,143		275		1,026		6,418		7,444		(58)		2010	40 years
Minot Arrowhead - Minot, ND		2,356		100			1,064		6,015		716		6,463		7,179		(2,464)		1973	15 1/2-40 years
Minot Plaza - Minot, ND		828		50			453		129		80		552		632		(260)		1993	40 years
Monticello C Store - Monticello, MN(1)		0		65			770		37		97		775		872		(165)		2003	40 years

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

April 30, 2011

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

			Initial Cost to Company						Gross amount at which carried at close of period
Description	Encumbrances(a)		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
Omaha Barnes & Noble - Omaha, NE	$	2,692	$	600	$	3,099	$	0	$	600	$	3,099	$	3,699	$	(1,201)		1995	40 years
Pine City C-Store - Pine City, MN		310		83		357		12		83		369		452		(74)		2003	40 years
Pine City Evergreen Square - Pine City, MN		1,906		154		2,646		582		385		2,997		3,382		(693)		2003	40 years
Rochester Maplewood Square - Rochester, MN(1)		0		3,275		8,610		876		3,652		9,109		12,761		(2,641)		1999	40 years
St. Cloud Westgate - St. Cloud, MN		3,373		1,219		5,535		632		1,242		6,144		7,386		(1,013)		2004	40 years
Weston Retail - Weston, WI		0		79		1,575		27		80		1,601		1,681		(328)		2003	40 years
Weston Walgreens - Weston, WI		3,200		66		1,718		672		67		2,389		2,456		(294)		2006	40 years
Total Commercial Retail	$	51,946	$	19,927	$	86,496	$	18,636	$	22,345		102,714	$	125,059	$	(23,504)
Subtotal	$	991,582	$	174,256	$	1,359,138	$	237,404	$	188,106	$	1,582,692	$	1,770,798	$	(328,952)

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

April 30, 2011

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

			Initial Cost to Company						Gross amount at which carried at close of period
Description	Encumbrances(a)		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	$	13	$	589	$	0	$	589	$	0		2008
Bismarck 700 E Main - Bismarck, ND		0		314		0		556		870		0		870		0		2008
Eagan Unimproved Land - Eagan, MN		0		423		0		0		423		0		423		0		2006
Georgetown Square Unimproved Land - Grand Chute, WI		2,221		1,860		0		0		1,860		0		1,860		0		2006
IRET Corporate Plaza Retention Pond - Minot, ND		0		75		0		87		162		0		162		0		2009
Kalispell Unimproved Land - Kalispell, MT		0		1,400		0		23		1,411		12		1,423		0		2003
Monticello Unimproved Land - Monticello, MN		0		115		0		2		117		0		117		0		2006
River Falls Unimproved Land - River Falls, WI		0		176		0		5		179		2		181		0		2003
Urbandale Unimproved Land - Urbandale, IA		0		5		0		108		113		0		113		0		2009
Weston Unimproved Land - Weston, WI		0		812		0		0		812		0		812		0		2006
Total Unimproved Land	$	2,221	$	5,756	$	0	$	794	$	6,536	$	14	$	6,550	$	0
Development in Progress
1st Avenue Building - Minot, ND	$	0	$	0	$	0	$	280	$	0	$	280	$	280	$	0		1981
Jamestown Buffalo Mall Theater - Jamestown, ND		0		0		1,436		97		0		1,533		1,533		0		2003
Georgetown Square Development - Grand Chute, WI		0		240		1,708		(173)		242		1,533		1,775		0		2006
IRET Corporate Plaza 2 - Minot, ND(2)		0		568		0		4,183		568		4,183		4,751		0		2009
Quarry Ridge 2 - Rochester, MN		0		942		412		0		942		412		1,354		0		2006
Total Development in Progress	$	0	$	1,750	$	3,556	$	4,387	$	1,752	$	7,941	$	9,693	$	0
Total	$	993,803	$	181,762	$	1,362,694	$	242,585	$	196,394	$	1,590,647	$	1,787,041	$	(328,952)

(a)   Amounts in this column are the mortgages payable balances as of April 30, 2011. These amounts do not include amounts owing under the Company’s multi-bank line of credit or under the Company’s two loans financed with Recovery Zone Facility Bonds.

(1)   As of April 30, 2011, this property was included in the collateral pool securing the Company’s $50.0 million multi-bank line of credit. The Company may add and remove eligible properties from the collateral pool if certain minimum collateral requirements are satisfied. Advances under the facility may not exceed 60% of the value of properties provided as security.

(2)   This property is collateral for a loan to the Company financed by Recovery Zone Facility Bonds.

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

April 30, 2011

Schedule III

REAL ESTATE AND ACCUMULATED DEPRECIATION

Reconciliations of total real estate carrying value for the three years ended April 30, 2011, 2010, and 2009 are as follows:

	(in thousands)
	2011			2010			2009
Balance at beginning of year	$	1,800,519		$	1,729,585		$	1,648,259
Additions during year
Multi-Family Residential		4,210			4,270			23,215
Commercial Office		6,836			2,096			8,573
Commercial Medical		19,249			38,125			19,084
Commercial Industrial		3,914			3,066			4,337
Commercial Retail		7,169			0			0
Improvements and Other		23,183			29,343			27,971
		1,865,080			1,806,485			1,731,439
Deductions during year
Cost of real estate sold		(86,994	)		(1,217	)		(49	)
Impairment charge		0			(1,678	)		(338	)
Other(A)		(7,288	)		(3,071	)		(1,467	)
Balance at close of year(B)	$	1,770,798		$	1,800,519		$	1,729,585

Reconciliations of accumulated depreciation/amortization for the three years ended April 30, 2011, 2010, and 2009, are as follows:

	(in thousands)
	2011			2010			2009
Balance at beginning of year	$	308,626		$	262,871		$	219,379
Additions during year
Provisions for depreciation		49,375			48,152			44,227
Deductions during year
Accumulated depreciation on real estate sold		(25,366	)		(737	)		(36	)
Other(C)		(3,683	)		(1,660	)		(699	)
Balance at close of year	$	328,952		$	308,626		$	262,871

(A) Consists of miscellaneous disposed assets and assets moved to Development in Progress.

(B) The net basis of the Company’s real estate investments for Federal Income Tax purposes is approximately $1.2 billion.

(C) Consists of miscellaneous disposed assets.

2011 Annual Report F-43

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

April 30, 2011

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		159				0
							$	0		$	167	$	159			$	0
Less:
Allowance for Loan Losses												$	(3	)
												$	156

	(in thousands)
	2011			2010			2009
MORTGAGE LOANS RECEIVABLE, BEGINNING OF YEAR	$	158		$	160		$	541
New participations in and advances on mortgage loans		0			0			0
	$	158		$	160		$	541
Collections		(2	)		(2	)		(381	)
Transferred to other assets		0			0			0
MORTGAGE LOANS RECEIVABLE, END OF YEAR	$	156		$	158		$	160

2011 Annual Report F-44

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.  Preferred share dividends consist of dividends on our Series A preferred shares.

	Fiscal Year ended April 30,
	2011	2010	2009	2008	2007
Consolidated ratio of earnings to fixed charges	1.07x	1.07x	1.14x	1.22x	1.24x
Consolidated ratio of earnings to combined fixed charges and preferred share dividends	1.03x	1.04x	1.10x	1.18x	1.20x

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REDEEMABLE NONCONTROLLING INTERESTS

12 Months Ended

Apr. 30, 2011

Notes To Financial Statements [Abstract]

REDEEMABLE NONCONTROLLING INTERESTS

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, 2011, 2010 and 2009, the estimated redemption value of the redeemable noncontrolling interests was $987,000, $1.8 million and $1.7 million, respectively.  Below is a table reflecting the activity of the redeemable noncontrolling interests.

	(in thousands)
	2011			2010			2009
Balance at beginning of fiscal year	$	1,812		$	1,737		$	1,802
Net income		(13	)		60			53
Net distributions		(442	)		(177	)		(112	)
Mark-to-market adjustments		(370	)		192			(6	)
Balance at close of fiscal year	$	987		$	1,812		$	1,737

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CREDIT RISK

12 Months Ended

Apr. 30, 2011

Notes To Financial Statements [Abstract]

CREDIT RISK

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, 2011 and 2010, these amounts totaled $23.5 million and $25.2 million, respectively.

XML

Entity Information (USD $)	12 Months Ended
	Apr. 30, 2011
Entity Registrant Name	INVESTORS REAL ESTATE TRUST
Entity Central Index Key	0000798359
Current Fiscal Year End Date	--04-30
Entity Well Known Seasoned Issuer	No
Entity Voluntary Filers	Yes
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Public Float	$ 679,638,043
Entity Common Stock Shares Outstanding	80,771,119
Document Fiscal Year Focus	2011
Document Fiscal Period Focus	FY

XML

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

12 Months Ended

Apr. 30, 2011

Notes To Financial Statements [Abstract]

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

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 80.1% and 78.7%, respectively, as of April 30, 2011 and 2010, 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 redemptions 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

In January 2011, the Financial Accounting Standards Board ("FASB") issued an update to the guidance contained in Accounting Standards Codification ("ASC") 310, Receivables.  The new guidance requires companies to provide more information about the credit quality of their financing receivables in the disclosures to financial statements including, but not limited to, significant purchases and sales of financing receivables, aging information and credit quality indicators. The adoption of this accounting guidance did not have a significant impact on the Company's consolidated financial statements.

2011 Annual Report F-8

NOTE 2 . continued

In January 2010, the FASB issued ASU No. 2010-06, Improving Disclosures About Fair Value ("ASU 2010-06"), which requires new disclosures about fair value measurements. Specifically, a reporting entity should disclose separately the amounts of significant transfers in and out of Level 1 and Level 2 fair value measurements and describe the reasons for the transfers. Additionally, the reconciliation for Level 3 fair value measurements should present separately information about purchasers, sales, issuances and settlements. To date, the Company has not had any transfers in and out of Level 1 and Level 2 fair value measurements, nor does it have any Level 3 fair value measurements. Therefore, ASU 2010-06 did not have any impact on the fair value disclosures included in 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 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 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 recorded at fair value 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

2011 Annual Report F-9

NOTE 2 . continued

performance, market conditions, expected holding period of each asset and legal and environmental concerns. If 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 from actual results. Plans to hold properties over longer periods decrease the likelihood of recording impairment losses. No impairment losses were recorded in fiscal year 2011.  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, in fiscal year 2010.  This property's tenant vacated the premises but continued to pay rent under a lease agreement that expired 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.

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 principles 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, 2011 and 2010, respectively, the Company added approximately $6.5 million and $7.5 million of new intangible assets and $32,000 and $20,000 of new intangible liabilities. The weighted average lives of the intangible assets and intangible liabilities acquired in the twelve months ended April 30, 2011 and 2010 are 9.5 years and 17.4 years, respectively.  Amortization of

2011 Annual Report F-10

NOTE 2 . continued

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 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, 2011 and 2010 were as follows:

	(in thousands)
	April 30, 2011			April 30, 2010
Identified intangible assets (included in intangible assets):
Gross carrying amount	$	91,986		$	90,271
Accumulated amortization		(42,154	)		(39,571	)
Net carrying amount	$	49,832		$	50,700
Indentified intangible liabilities (included in other liabilities):
Gross carrying amount	$	1,104		$	1,260
Accumulated amortization		(900	)		(940	)
Net carrying amount	$	204		$	320

The effect of amortization of acquired below-market leases and acquired above-market leases on rental income was approximately $(72,000) and $(45,000) for the twelve months ended April 30, 2011 and 2010, 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)
2012	$	45
2013		32
2014		35
2015		18
2016		14

Amortization of all other identified intangible assets (a component of depreciation/amortization related to real estate investments) was $7.1 million and $8.7 million for the twelve months ended April 30, 2011 and 2010, 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)
2012	$	5,521
2013		4,546
2014		4,140
2015		3,783
2016		3,566

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 book values as of April 30, 2011 and 2010 were $1.1 million and $1.4 million, respectively. 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 2011 the Company disposed of four multi-family residential properties that had goodwill assigned, and as result, approximately $261,000 of goodwill was derecognized.

2011 Annual Report F-11

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 additional property management offices in Kansas, Minnesota, Missouri, Montana, Nebraska, North Dakota and South Dakota. The balance sheet reflects these assets at cost, net of accumulated depreciation. As of April 30, 2011 and 2010, the cost was $2.9 million and $2.3 million, respectively. Accumulated depreciation was approximately $1.2 million and $924,000 as of April 30, 2011 and 2010, 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 $350,000; United Community Bank, Minot, North Dakota, deposit of $275,000; Commerce Bank, A Minnesota Banking Corporation, deposit of $250,000; First International Bank, Watford City, North Dakota, deposit of $6.0 million; Peoples State Bank of Velva, North Dakota, deposit of $150,000; Associated Bank, Green Bay, Wisconsin, deposit of $200,000, and Equity Bank, Minnetonka, Minnesota, deposit of $300,000.

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 that 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, 2011, 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

2011 Annual Report F-12

NOTE 2 . continued

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, as well as the Company's ability and intent to hold the security until recovery. The Company does not engage in trading activities.

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, 2011, 2010 and 2009 is as follows:

	(in thousands)
	2011			2010			2009
Balance at beginning of year	$	1,172		$	1,131		$	1,264
Provision		733			1,399			2,472
Write-off		(589	)		(1,358	)		(2,605	)
Balance at close of year	$	1,316		$	1,172		$	1,131

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-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:

2011 Annual Report F-13

NOTE 2 . continued

	(in thousands)
	For Years Ended April 30,
Amounts Attributable to Investors Real Estate Trust	2011			2010				2009
Income from continuing operations - Investors Real Estate Trust		$	4,111		$	4,444			$	8,284
Discontinued Operations - Investors Real Estate Trust			15,971			(443	)			242
Net income attributable to Investors Real Estate Trust		$	20,082		$	4,001			$	8,526

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, 2011, 2010 and 2009, 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 subject 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 years 2011 and 2010, the Company's TRS had a net operating loss.  There were no income tax provisions or material deferred income tax items for our TRS for the fiscal years ended April 30, 2011 and 2010.  The Company's TRS is the tenant in the Company's Wyoming assisted living facilities.

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.

Distributions for the calendar year ended December 31, 2010 were characterized, for federal income tax purposes, as 28.53% ordinary income and 71.47% return of capital.

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.

2011 Annual Report F-14

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 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.

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CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Apr. 30, 2011	Apr. 30, 2010
Real estate investments
Mortgage loans receivable, net of allowance (in dollars)	$ 3	$ 3
Other assets
Receivable arising from straight-lining of rents, net of allowance (in dollars)	996	912
Accounts receivable, net of allowance (in dollars)	317	257
Intangible assets, net of accumulated amortization (in dollars)	42,154	39,571
Property and equipment, net of accumulated depreciation (in dollars)	1,231	924
Deferred charges and leasing costs, net of accumulated amortization (in dollars)	13,675	13,131
EQUITY
Preferred Shares of Beneficial Interest, no par value (in dollars per share)	$ 0.0000	$ 0.0000
Preferred Shares of Beneficial Interest, shares issued (in shares)	1,150,000	1,150,000
Preferred Shares of Beneficial Interest, shares outstanding (in shares)	1,150,000	1,150,000
Preferred Shares of Beneficial Interest, aggregate liquidation preference (in dollars)	$ 28,750,000	$ 28,750,000
Common Shares of Beneficial Interest, no par value (in dollars per share)	$ 0.0000	$ 0.0000
Common Shares of Beneficial Interest, shares issued (in shares)	80,523,265	75,805,159
Common Shares of Beneficial Interest, shares outstanding (in shares)	80,523,265	75,805,159
Noncontrolling interests - Operating Partnership (in shares)	20,067,350	20,521,365

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) (Parenthetical) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Apr. 30, 2011	Apr. 30, 2010	Apr. 30, 2009
CASH FLOWS FROM FINANCING ACTIVITIES
Distributions paid to common shareholders, net of reinvestment	$ 10,627	$ 9,762	$ 10,603
Distributions paid to noncontrolling interests - Unitholders of the Operating Partnership, net reinvestment	$ 746	$ 772	$ 782

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FAIR VALUE OF FINANCIAL INSTRUMENTS

12 Months Ended

Apr. 30, 2011

Notes To Financial Statements [Abstract]

FAIR VALUE OF FINANCIAL INSTRUMENTS

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.

Lines of Credit.  The carrying amount approximates fair value because the variable rate debt re-prices frequently.

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, 2011 and 2010, are as follows:

	(in thousands)
	2011				2010
	Carrying  Amount		Fair Value		Carrying  Amount		Fair Value
FINANCIAL ASSETS
Mortgage loans receivable	$	156	$	156	$	158	$	158
Cash and cash equivalents		41,191		41,191		54,791		54,791
Marketable securities - available-for-sale		625		625		420		420
FINANCIAL LIABILITIES
Other debt		8,200		7,279		1,000		1,142
Lines of credit		30,000		30,000		6,550		6,550
Mortgages payable		993,803		1,013,713		1,057,619		1,015,879

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QUARTERLY RESULTS OF CONSOLIDATED OPERATIONS (unaudited)

12 Months Ended

Apr. 30, 2011

Notes To Financial Statements [Abstract]

QUARTERLY RESULTS OF CONSOLIDATED OPERATIONS (unaudited)

NOTE 18 . QUARTERLY RESULTS OF CONSOLIDATED OPERATIONS (unaudited)

	(in thousands, except per share data)
QUARTER ENDED	July 31, 2010		October 31, 2010		January 31, 2011		April 30, 2011
Total revenue as previously reported	$	59,176	$	58,904	$	60,203	$	59,124
Reclassified to discontinued operations	$	51	$	57	$	57	$	57
Adjusted total revenues	$	59,125	$	58,847	$	60,146	$	59,067
Net Income available to common shareholders	$	1,393	$	5,226	$	11,240	$	(149	)
Net Income per common share - basic & diluted	$	.02	$	.07	$	.14	$	(.01	)

2011 Annual Report F-30

NOTE 18 . continued

	(in thousands, except per share data)
QUARTER ENDED	July 31, 2009		October 31, 2009			January 31, 2010			April 30, 2010
Total revenue as previously reported	$	58,009	$	56,758		$	57,335		$	59,409
Reclassified to discontinued operations	$	49	$	49		$	49		$	49
Adjusted total revenues	$	57,960	$	56,709		$	57,286		$	59,360
Net Income available to common shareholders	$	1,424	$	(308	)	$	(141	)	$	654
Net Income per common share - basic & diluted	$	.02	$	.00		$	.00		$	.01

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.

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ORGANIZATION

12 Months Ended

Apr. 30, 2011

Notes To Financial Statements [Abstract]

ORGANIZATION

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, except for taxes on undistributed REIT taxable income and taxes on the income generated by our taxable REIT subsidiary (“TRS”). Our TRS is subject to corporate federal and state income tax on its taxable income at regular statutory rates. We have considered estimated future taxable income and have determined that there were no material income tax provisions or material net deferred income tax items for our TRS for the years ended April 30, 2011 and 2010. 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, Michigan, Missouri,  Montana, Nebraska, South Dakota, Wisconsin and Wyoming. As of April 30, 2011, IRET owned 78 multi-family residential properties with approximately 8,661 apartment units and 176 commercial properties, consisting of commercial office, commercial medical, commercial industrial and commercial retail properties, totaling approximately 12.2 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.

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) (USD $) In Thousands, except Per Share data, unless otherwise specified	12 Months Ended
	Apr. 30, 2011	Apr. 30, 2010	Apr. 30, 2009
REVENUE
Real estate rentals	$ 192,178	$ 186,321	$ 183,153
Tenant reimbursement	45,007	44,994	45,167
TOTAL REVENUE	237,185	231,315	228,320
EXPENSES
Depreciation/amortization related to real estate investments	55,809	55,054	52,335
Utilities	18,238	17,101	18,112
Maintenance	29,240	26,972	26,431
Real estate taxes	30,852	30,210	29,077
Insurance	2,304	3,615	2,864
Property management expenses	21,276	18,380	16,716
Administrative expenses	6,617	5,716	4,430
Advisory and trustee services	605	502	452
Other expenses	1,774	2,513	1,440
Amortization related to non-real estate investments	2,679	2,362	2,060
Impairment of real estate investments	0	708	0
TOTAL EXPENSES	169,394	163,133	153,917
Gain on involuntary conversion	0	1,660	0
Interest expense	(63,941)	(65,581)	(64,928)
Interest income	259	539	599
Other income	282	355	314
Income from continuing operations	4,391	5,155	10,388
Income (loss) from discontinued operations	19,960	(570)	325
NET INCOME	24,351	4,585	10,713
Net income attributable to noncontrolling interests - Operating Partnership	(4,449)	(562)	(2,227)
Net loss (income) attributable to noncontrolling interests - consolidated real estate entities	180	(22)	40
Net income attributable to Investors Real Estate Trust	20,082	4,001	8,526
Dividends to preferred shareholders	(2,372)	(2,372)	(2,372)
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS	$ 17,710	$ 1,629	$ 6,154
Earnings per common share from continuing operations - Investors Real Estate Trust - basic and diluted	$ 0.0200	$ 0.0400	$ 0.1000
Earnings (loss) per common share from discontinued operations - Investors Real Estate Trust - basic and diluted	$ 0.2000	$ (0.0100)	$ 0.0100
NET INCOME PER COMMON SHARE - BASIC & DILUTED	$ 0.2200	$ 0.0300	$ 0.1100
DIVIDENDS PER COMMON SHARE	$ 0.6860	$ 0.6845	$ 0.6770

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SEGMENT REPORTING

12 Months Ended

Apr. 30, 2011

Notes To Financial Statements [Abstract]

OPERATING SEGMENTS

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.

2011 Annual Report F-21

NOTE 11 . continued

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, 2011, 2010 and 2009 from our five reportable segments, and reconcile net operating income of reportable segments to net income as reported in the consolidated financial statements. Segment assets are also reconciled to Total Assets as reported in the consolidated financial statements.

	(in thousands)
Year Ended April 30, 2011	Multi-Family  Residential			Commercial Office		Commercial Medical		Commercial Industrial		Commercial Retail		Total
Real estate revenue		$	66,838	$	77,747	$	66,048	$	13,165	$	13,387	$	237,185
Real estate expenses			34,129		36,055		22,466		4,328		4,932		101,910
Net operating income		$	32,709	$	41,692	$	43,582	$	8,837	$	8,455		135,275
Depreciation/amortization													(58,488	)
Administrative, advisory and trustee services													(7,222	)
Other expenses													(1,774	)
Interest expense													(63,941	)
Interest and other income													541
Income from continuing operations													4,391
Income from discontinued operations													19,960
Net income												$	24,351

	(in thousands)
Year Ended April 30, 2010	Multi-Family  Residential			Commercial Office		Commercial Medical		Commercial Industrial		Commercial Retail		Total
Real estate revenue		$	65,478	$	82,079	$	57,439	$	13,095	$	13,224	$	231,315
Real estate expenses			32,615		36,833		17,904		4,121		4,805		96,278
Gain on involuntary conversion			1,660		0		0		0		0		1,660
Net operating income		$	34,523	$	45,246	$	39,535	$	8,974	$	8,419		136,697
Depreciation/amortization													(57,416	)
Administrative, advisory and trustee services													(6,218	)
Other expenses													(2,513	)
Impairment of real estate investment													(708	)
Interest expense													(65,581	)
Interest and other income													894
Income from continuing operations													5,155
Loss from discontinued operations													(570	)
Net income												$	4,585

	(in thousands)
Year Ended April 30, 2009	Multi-Family  Residential			Commercial Office		Commercial Medical		Commercial Industrial		Commercial Retail		Total
Real estate revenue		$	65,632	$	83,446	$	52,547	$	12,488	$	14,207	$	228,320
Real estate expenses			31,315		37,644		16,046		3,142		5,053		93,200
Net operating income		$	34,317	$	45,802	$	36,501	$	9,346	$	9,154		135,120
Depreciation/amortization													(54,395	)
Administrative, advisory and trustee fees													(4,882	)
Other expenses													(1,440	)
Interest expense													(64,928	)
Interest and other income													913
Income from continuing operations													10,388
Income from discontinued operations													325
Net income													10,713

2011 Annual Report F-22

NOTE 11 . continued

Segment Assets and Accumulated Depreciation

	(in thousands)
As of April 30, 2011	Multi-Family  Residential				Commercial Office			Commercial Medical			Commercial Industrial			Commercial Retail			Total
Segment assets
Property owned		$	484,815		$	595,491		$	447,831		$	117,602		$	125,059		$	1,770,798
Less accumulated depreciation			(117,718	)		(104,650	)		(65,367	)		(17,713	)		(23,504	)		(328,952	)
Total property owned		$	367,097		$	490,841		$	382,464		$	99,889		$	101,555		$	1,441,846
Cash and cash equivalents																		41,191
Marketable securities - available-for-sale																		625
Receivables and other assets																		115,302
Development in progress																		9,693
Unimproved land																		6,550
Mortgage loans receivable, net of allowance																		156
Total Assets																	$	1,615,363

	(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

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CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Apr. 30, 2011	Apr. 30, 2010
Real estate investments
Property owned	$ 1,770,798	$ 1,800,519
Less accumulated depreciation	(328,952)	(308,626)
	1,441,846	1,491,893
Development in progress	9,693	2,831
Unimproved land	6,550	6,007
Mortgage loans receivable, net of allowance of $3 and $3, respectively	156	158
Total real estate investments	1,458,245	1,500,889
Other assets
Cash and cash equivalents	41,191	54,791
Marketable securities - available-for-sale	625	420
Receivable arising from straight-lining of rents, net of allowance of $996 and $912, respectively	18,933	17,320
Accounts receivable, net of allowance of $317 and $257, respectively	5,646	4,916
Real estate deposits	329	516
Prepaid and other assets	2,351	1,189
Intangible assets, net of accumulated amortization of $42,154 and $39,571, respectively	49,832	50,700
Tax, insurance, and other escrow	15,268	9,301
Property and equipment, net of accumulated depreciation of $1,231 and $924, respectively	1,704	1,392
Goodwill	1,127	1,388
Deferred charges and leasing costs, net of accumulated amortization of $13,675 and $13,131, respectively	20,112	18,108
TOTAL ASSETS	1,615,363	1,660,930
LIABILITIES
Accounts payable and accrued expenses	37,879	38,514
Revolving lines of credit	30,000	6,550
Mortgages payable	993,803	1,057,619
Other	8,404	1,320
TOTAL LIABILITIES	1,070,086	1,104,003
COMMITMENTS AND CONTINGENCIES (NOTE 15)
REDEEMABLE NONCONTROLLING INTERESTS - CONSOLIDATED REAL ESTATE ENTITIES	987	1,812
Investors Real Estate Trust shareholders' equity
Preferred Shares of Beneficial Interest (Cumulative redeemable preferred shares, no par value, 1,150,000 shares issued and outstanding at April 30, 2011 and April 30, 2010, aggregate liquidation preference of $28,750,000)	27,317	27,317
Common Shares of Beneficial Interest (Unlimited authorization, no par value, 80,523,265 shares issued and outstanding at April 30, 2011, and 75,805,159 shares issued and outstanding at April 30, 2010)	621,936	583,618
Accumulated distributions in excess of net income	(237,563)	(201,412)
Total Investors Real Estate Trust shareholders' equity	411,690	409,523
Noncontrolling interests - Operating Partnership (20,067,350 units at April 30, 2011 and 20,521,365 units at April 30, 2010)	123,627	134,970
Noncontrolling interests - consolidated real estate entities	8,973	10,622
Total equity	544,290	555,115
TOTAL LIABILITIES AND EQUITY	$ 1,615,363	$ 1,660,930

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DISCONTINUED OPERATIONS

12 Months Ended

Apr. 30, 2011

Notes To Financial Statements [Abstract]

DISCONTINUED OPERATIONS

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, 2011, 2010 and 2009. 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, 2011, 2010 and 2009.  The financial statements have been restated to reflect the property sold during the six months ended October 31, 2011.  During the second quarter of fiscal year 2012 the Company sold a retail property in Livingston, Montana.

2011 Annual Report F-23

NOTE 12 . continued

	(in thousands)
	2011			2010			2009
REVENUE
Real estate rentals	$	6,123		$	11,393		$	11,605
Tenant reimbursement		36			67			80
TOTAL REVENUE		6,159			11,460			11,685
EXPENSES
Depreciation/amortization related to real estate investments		1,182			2,339			2,311
Utilities		558			957			863
Maintenance		708			1,236			1,172
Real estate taxes		638			1,319			1,366
Insurance		110			290			187
Property management expenses		856			1,461			1,363
Other expenses		1			0			0
Amortization related to non-real estate investments		4			8			8
Impairment of real estate investments		0			970			338
TOTAL EXPENSES		4,057			8,580			7,608
Interest expense		(1,512	)		(3,525	)		(3,815	)
Interest income		5			7			9
Income (loss) from discontinued operations before gain on sale		595			(638	)		271
Gain on sale of discontinued operations		19,365			68			54
INCOME (LOSS) FROM DISCONTINUED OPERATIONS	$	19,960		$	(570	)	$	325
Segment Data
Multi-Family Residential	$	19,224		$	437		$	560
Commercial Office		0			(169	)		(338	)
Commercial Medical		(8	)		14			11
Commercial Industrial		726			(23	)		(12	)
Commercial Retail		18			(829	)		104
Total	$	19,960		$	(570	)	$	325

	(in thousands)
	2011			2010			2009
Property Sale Data
Sales price	$	83,330		$	560		$	70
Net book value and sales costs		(63,965	)		(492	)		(16	)
Gain on sale of discontinued operations	$	19,365		$	68		$	54

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CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (unaudited) (USD $) In Thousands, except Share data	PREFERRED STOCK	COMMON STOCK	ACCUMULATED DISTRIBUTIONS IN EXCESS OF NET INCOME	NONCONTROLLING INTERESTS	Total
Balance at Apr. 30, 2008	$ 27,317	$ 439,255	$ (122,498)	$ 173,557	$ 517,631
Balance, shares (in shares) at Apr. 30, 2008	1,150	57,732
Net income attributable to Investors Real Estate Trust and nonredeemable noncontrolling interests			8,526	2,134	10,660
Distributions - common shares and units			(39,612)	(14,383)	(53,995)
Distributions - preferred shares			(2,372)		(2,372)
Distribution reinvestment plan		11,385			11,385
Distribution reinvestment plan, shares (in shares)		1,186
Shares issued		5,978			5,978
Shares issued, shares (in shares)		641
Partnership units issued				3,730	3,730
Redemption of units for common shares		5,034		(5,034)	0
Redemption of units for common shares, shares (in shares)		746
Adjustments to redeemable noncontrolling interests		6			6
Fractional shares repurchased		(10)			(10)
Fractional shares repurchased (in shares)		(1)
Other				394	394
Balance at Apr. 30, 2009	27,317	461,648	(155,956)	160,398	493,407
Balance, shares (in shares) at Apr. 30, 2009	1,150	60,304
Net income attributable to Investors Real Estate Trust and nonredeemable noncontrolling interests			4,001	524	4,525
Distributions - common shares and units			(47,085)	(14,261)	(61,346)
Distributions - preferred shares			(2,372)		(2,372)
Distribution reinvestment plan		10,534			10,534
Distribution reinvestment plan, shares (in shares)		1,240
Shares issued		108,421			108,421
Shares issued, shares (in shares)		13,555
Partnership units issued				3,897	3,897
Redemption of units for common shares		3,755		(3,755)	0
Redemption of units for common shares, shares (in shares)		707
Adjustments to redeemable noncontrolling interests		(192)			(192)
Fractional shares repurchased		(11)			(11)
Fractional shares repurchased (in shares)		(1)
Other		(537)		(1,211)	(1,748)
Balance at Apr. 30, 2010	27,317	583,618	(201,412)	145,592	555,115
Balance, shares (in shares) at Apr. 30, 2010	1,150	75,805
Net income attributable to Investors Real Estate Trust and nonredeemable noncontrolling interests			20,082	4,282	24,364
Distributions - common shares and units			(53,861)	(13,803)	(67,664)
Distributions - preferred shares			(2,372)		(2,372)
Distribution reinvestment plan		11,373			11,373
Distribution reinvestment plan, shares (in shares)		1,334
Shares issued		19,851			19,851
Shares issued, shares (in shares)		2,376
Partnership units issued				4,996	4,996
Redemption of units for common shares		6,905		(6,905)	0
Redemption of units for common shares, shares (in shares)		1,009
Adjustments to redeemable noncontrolling interests		370			370
Fractional shares repurchased		(10)			(10)
Fractional shares repurchased (in shares)		(1)
Other		(171)		(1,562)	(1,733)
Balance at Apr. 30, 2011	$ 27,317	$ 621,936	$ (237,563)	$ 132,600	$ 544,290
Balance, shares (in shares) at Apr. 30, 2011	1,150	80,523

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MARKETABLE SECURITIES

12 Months Ended

Apr. 30, 2011

Notes To Financial Statements [Abstract]

MARKETABLE SECURITIES

NOTE 6 . MARKETABLE SECURITIES

The amortized cost and fair value of marketable securities available-for-sale at April 30, 2011 and 2010 are as follows.

	(in thousands)
2011	Amortized Cost			Gross Unrealized  Gains			Gross Unrealized  Losses			Fair Value
Bank certificates of deposit		$	625		$	0		$	0		$	625
		$	625		$	0		$	0		$	625

	(in thousands)
2010	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, 2011, $275,000 of the investment in bank certificates of deposit will mature in less than one year, $50,000 will mature in May 2012 and the remaining $300,000 will mature in March 2014.

There were no realized gains or losses on sales of securities available-for-sale for the fiscal years ended April 30, 2011, 2010 and 2009. There were no other-than-temporary impairment losses incurred on the securities available-for-sale for the fiscal years ended April 30, 2011, 2010 and 2009.

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MORTGAGE LOANS RECEIVABLE - NET

12 Months Ended

Apr. 30, 2011

Notes To Financial Statements [Abstract]

MORTGAGE LOANS RECEIVABLE - NET

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, 2011, are as follows:

Year Ended April 30,	(in thousands)
2012	$	2
2013		157
		159
Less allowance for doubtful accounts		(3	)
	$	156

There were no non-performing mortgage loans receivable as of April 30, 2011 and 2010.

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COMMON AND PREFERRED SHARES OF BENEFICIAL INTEREST AND SHAREHOLDERS' EQUITY

12 Months Ended

Apr. 30, 2011

Notes To Financial Statements [Abstract]

COMMON AND PREFERRED SHARES OF BENEFICIAL INTEREST AND SHAREHOLDERS' EQUITY

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

Distribution Reinvestment and Share Purchase Plan.  During fiscal years 2011 and 2010, IRET issued 1.7 million and 1.4 million common shares, respectively, pursuant to its distribution reinvestment and share purchase plan, at a total value at issuance of $14.5 million and $11.9 million, respectively. The shares issued under the distribution reinvestment and share purchase plan during fiscal year 2011 consisted of 1.3 million shares valued at issuance at $11.4 million that were issued for reinvested distributions and approximately 372,000 shares valued at $3.1 million

2011 Annual Report F-29

NOTE 17 . continued

at issuance that were sold for voluntary cash contributions. 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. 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 2011 and 2010, respectively, approximately 1.0 million and 707,000 Units were converted to common shares, with a total value of $6.9 million and $3.8 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.

During fiscal year 2011, the Company sold 1.8 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 $15.0 million, before offering expenses but after underwriting discounts and commissions.  As of April 30, 2011, the Company had available securities under this registration statement in the aggregate amount of approximately $18.2 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 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 shares 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.

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EARNINGS PER SHARE

12 Months Ended

Apr. 30, 2011

Notes To Financial Statements [Abstract]

EARNINGS PER SHARE

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. Units can be exchanged for shares on a one-for-one basis after a minimum holding period of one year. 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 statements for the fiscal years ended April 30, 2011, 2010 and 2009:

2011 Annual Report F-24

NOTE 13 . continued

	For Years Ended April 30,
	(in thousands, except per share data)
	2011			2010			2009
NUMERATOR
Income from continuing operations - Investors Real Estate Trust	$	4,116		$	4,444		$	8,284
Income (loss) from discontinued operations - Investors Real Estate Trust		15,966			(443	)		242
Net income attributable to Investors Real Estate Trust		20,082			4,001			8,526
Dividends to preferred shareholders		(2,372	)		(2,372	)		(2,372	)
Numerator for basic earnings per share - net income available to common shareholders		17,710			1,629			6,154
Noncontrolling interests - Operating Partnership		4,449			562			2,227
Numerator for diluted earnings per share	$	22,159		$	2,191		$	8,381
DENOMINATOR
Denominator for basic earnings per share weighted average shares		78,628			69,093			58,603
Effect of convertible operating partnership units		20,154			20,825			21,217
Denominator for diluted earnings per share		98,782			89,918			79,820
Earnings per common share from continuing operations - Investors Real Estate Trust - basic and diluted	$	.02		$	.04		$	.10
Earnings (loss) per common share from discontinued operations - Investors Real Estate Trust - basic and diluted		.20			(.01	)		.01
NET INCOME PER COMMON SHARE - BASIC & DILUTED	$	.22		$	.03		$	.11

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TRANSACTIONS WITH RELATED PARTIES

12 Months Ended

Apr. 30, 2011

Notes To Financial Statements [Abstract]

TRANSACTIONS WITH RELATED PARTIES

NOTE 9 . TRANSACTIONS WITH RELATED PARTIES

BANKING SERVICES

The Company has an ongoing banking relationship 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.  Currently, and during fiscal year 2011, the Company has two mortgage loans outstanding with First International, with original principal balances of $3.2 million (Grand Forks MedPark Mall) and $2.4 million (Georgetown Square/Fox River), respectively, bearing interest at 6.25% and 7.25% per annum.  For a portion of fiscal year 2011, the Company had outstanding a third mortgage loan with First International in the amount of approximately $406,000 (Dakota West Plaza), bearing interest at 7.63% per annum; this loan was repaid in the first quarter of fiscal year 2011.  The Company paid interest on these loans of approximately $190,000, $165,000 and $3,000, respectively, in fiscal year 2011, and paid $32,000 in origination fees and closing costs on the Grand Forks MedPark Mall loan.  For a portion of fiscal year 2011, the Company maintained a $14.0 million unsecured line of credit with First International, for which it paid a total of approximately $72,000 in interest during fiscal year 2011.  This line of credit was terminated during the second quarter of fiscal year 2011 and replaced with a multi-bank line of credit with a current capacity of $50.0 million, of which First International is the lead bank and a participant with a $12.0 million commitment.  In fiscal year 2011, the Company paid First International a total of $212,000 in interest on First International's portion of the outstanding balance of this credit line, and paid fees of $219,000.  In connection with this multi-bank line of credit, the Company maintains compensating balances with First International totaling $6.0 million, of which $1.5 million is held in a non-interest bearing account, and $4.5 million is held in an account that pays the Company interest on the deposited amount of 0.75% per annum.  The Company also maintains a number of checking accounts with First International.  In fiscal year 2011, the Company paid less than $500 in total in various bank service and other fees charged on these checking accounts.

In fiscal years 2010 and 2009, the Company paid interest of approximately $238,000 and $91,000, respectively, for borrowing under the $14.0 million line of credit that was subsequently terminated in fiscal year 2011, and paid a $10,000 renewal fee for the line of credit in fiscal year 2010.   In fiscal year 2010, the Company paid interest and fees on outstanding mortgage loans totaling approximately $789,000, and paid interest in fiscal year 2009 on mortgage loans outstanding of approximately $204,000.  In fiscal year 2010 and 2009, the Company paid under $500 in total in various bank service and other fees charged on checking accounts maintained with First International.

Total payments of interest and fees from the Company to First International Bank in fiscal year 2011 were approximately $893,000, in fiscal year 2010 were $1.0 million and in fiscal year 2009 were $295,000.

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LINE OF CREDIT

12 Months Ended

Apr. 30, 2011

Notes To Financial Statements [Abstract]

LINE OF CREDIT

NOTE 7 . LINE OF CREDIT

IRET has a line of credit with one financial institution as lead bank as of April 30, 2011. Interest payments on outstanding borrowings are due monthly. This credit facility is summarized in the following table:

	(in thousands)
Financial Institution	Amount  Available		Amount  Outstanding as of April 30,  2011			Amount  Outstanding as of April  30, 2010				Applicable  Interest Rate as of April 30, 2011			Maturity  Date	Weighted  Average Int. Rate on Borrowings during fiscal year 2011
First International Bank & Trust	$	50,000		$	30,000		$	0	(1)		5.65	%	8/11/13		5.73	%

2011 Annual Report F-16

NOTE 7 . continued

As of April 30, 2011, the Company had one secured line of credit with First International Bank and Trust, Watford City, North Dakota, as lead bank. This line of credit matures on August 11, 2013, and had, as of April 30, 2011, lending commitments of $50.0 million, with the capacity to grow to $60.0 million, subject to identifying additional interested participating banks. Participants in the line of credit include several banks whose previous separate credit lines to the Company were terminated during the second quarter of fiscal year 2011 following their consolidation into the First International Bank-led facility. Participants in this secured credit facility as of April 30, 2011 included, in addition to First International Bank, the following financial institutions:  The Bank of North Dakota; First Western Bank and Trust; Dacotah Bank; United Community Bank of North Dakota; American State Bank & Trust Company and Town & Country Credit Union. As of April 30, 2011, the Company had advanced $30.0 million under the line of credit. The line of credit has a minimum outstanding principal balance requirement of $10.0 million. The interest rate on borrowings under the facility is Wall Street Journal Prime Rate +1.0%, with a floor of 5.65% and a cap of 8.65% during the initial three-year term of the facility; interest-only payments are due monthly based on the total amount of advances outstanding.  The line of credit may be prepaid at par at any time. The facility includes customary loan covenants including restrictions regarding minimum debt-service ratios to be maintained in the aggregate and individually on properties in the collateral pool, and the Company is also required to maintain minimum depository account(s) totaling $6.0 million with First International, of which $1.5 million is to be held in a non-interest bearing account. As of April 30, 2011, 26 properties with a total cost of $122.1 million collateralized this line of credit. As of April 30, 2011, the management of the Company believes it is in compliance with the facility covenants.

(1) As of April 30, 2010, the Company had $4.0 million in borrowings outstanding under a $14.0 million line of credit with First International Bank and Trust. This $14.0 million line of credit, and three other lines of credit that were outstanding at various times during fiscal years 2011, 2010 and 2009, with, respectively, First Western Bank and Trust, United Community Bank and Dacotah Bank, were replaced by the current multi-bank line of credit.  As of April 30, 2010, the Company had outstanding borrowings at United Community Bank and Dacotah Bank of $1.1 million and $1.5 million, respectively.

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MORTGAGES PAYABLE AND LINE OF CREDIT

12 Months Ended

Apr. 30, 2011

Notes To Financial Statements [Abstract]

MORTGAGES PAYABLE AND LINE 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.As of April 30, 2011, the management of the Company believes there are no defaults or material compliance issues in regard to any mortgages payable.Interest rates on mortgages payable range from 2.82% to 8.25%, and the mortgages have varying maturity dates from June 1, 2011, through June 9, 2035.

Of the mortgages payable, the balance of fixed rate mortgages totaled $992.3 million at April 30, 2011 and $1.0 billion at April 30, 2010, and the balances of variable rate mortgages totaled $1.5 million and $29.0 million as of April 30, 2011, and 2010, 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, 2011, the weighted average rate of interest on the Company's mortgage debt was 5.92%, compared to 6.17% on April 30, 2010. The aggregate amount of required future principal payments on mortgages payable as of April 30, 2011, is as follows:

Year Ended April 30,	(in thousands)
2012	$	58,741
2013		50,092
2014		65,354
2015		92,548
2016		77,771
Thereafter		649,297
Total payments	$	993,803

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ACQUISITIONS AND DISPOSITIONS

12 Months Ended

Apr. 30, 2011

Notes To Financial Statements [Abstract]

ACQUISITIONS AND DISPOSITIONS

NOTE 10 . ACQUISITIONS AND DISPOSITIONS IN FISCAL YEARS 2011 AND 2010

PROPERTY ACQUISITIONS

IRET Properties paid approximately $45.6 million for real estate properties added to its portfolio during fiscal year 2011, compared to $55.4 million in fiscal year 2010. Of the $45.6 million paid for real estate properties added to the Company’s portfolio in fiscal year 2011, approximately $5.0 million consisted of the value of limited partnership units of the Operating Partnership and approximately $9.9 million consisted of the assumption of mortgage debt, with the remainder paid in cash. The Company expensed approximately $179,000 of transaction costs related to the acquisitions in fiscal year 2011. Of the $55.4 million paid in fiscal year 2010, approximately $3.9 million was paid in the form 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. The fiscal year 2011 and 2010 additions are detailed below.

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COMMITMENTS AND CONTINGENCIES

12 Months Ended

Apr. 30, 2011

Notes To Financial Statements [Abstract]

COMMITMENTS AND CONTINGENCIES

NOTE 15 . COMMITMENTS AND CONTINGENCIES

Ground Leases. As of April 30, 2011, 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 1.3 to 90 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, 2011 is as follows:

	(in thousands)
Year Ended April 30,	Lease Payments
2012		$	501
2013			499
2014			500
2015			501
2016			473
Thereafter			22,486
Total		$	24,960

2011 Annual Report F-25

NOTE 15 . continued

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 recorded 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, 2011, the Company is committed to fund approximately $5.1 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:

2011 Annual Report F-26

NOTE 15 . continued

	(in thousands)
			Gross Rental Revenue
Property	Investment Cost		2011		2010		2009
Billings 2300 Grant Road - Billings, MT	$	2,522	$	226	$	0	$	0
Edgewood Vista-Belgrade, MT		2,135		191		196		196
Edgewood Vista-Billings, MT		4,274		384		396		396
Edgewood Vista-Bismarck, ND		10,903		1,031		1,008		1,008
Edgewood Vista-Brainerd, MN		10,667		1,010		988		988
Edgewood Vista-Columbus, NE		1,481		131		136		136
Edgewood Vista-East Grand Forks, MN		4,996		475		465		464
Edgewood Vista-Fargo, ND		26,087		2,415		2,387		2,065
Edgewood Vista-Fremont, NE		588		72		72		72
Edgewood Vista-Grand Island, NE		1,431		129		132		132
Edgewood Vista-Hastings, NE		606		76		76		76
Edgewood Vista-Hermantown I, MN		21,510		2,404		2,359		2,040
Edgewood Vista-Hermantown II, MN		12,359		1,170		1,144		1,144
Edgewood Vista-Kalispell, MT		624		76		76		76
Edgewood Vista-Missoula, MT		999		96		96		96
Edgewood Vista-Norfolk, NE		1,332		122		124		124
Edgewood Vista-Omaha, NE		676		80		80		80
Edgewood Vista-Sioux Falls, SD		3,353		312		312		312
Edgewood Vista-Spearfish, SD		9,569		642		628		628
Edgewood Vista-Virginia, MN		17,132		2,054		2,008		1,736
Fargo 1320 45th Street N - Fargo, ND		4,160		333		0		0
Great Plains - Fargo, ND		15,375		1,876		1,876		1,876
Healtheast St John & Woodwinds - Maplewood & Woodbury, MN		21,601		2,152		2,152		2,052
Minnesota National Bank - Duluth, MN		1,745		105		164		211
Missoula 3050 Great Northern - Missoula, MT		2,723		243		0		0
Sartell 2000 23rd Street South - Sartell, MN		12,693		1,209		1,173		1,292
St. Michael Clinic - St. Michael, MN		2,851		244		241		240
Stevens Point - Stevens Point, WI		15,020		1,104		1,356		1,356
Total	$	209,412	$	20,362	$	19,645	$	18,796

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 136 of the Company's properties, consisting of approximately 7.5 million square feet of our combined commercial segment's properties and 3,888 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 $854.6 million at April 30, 2011. 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 materially 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

2011 Annual Report F-27

NOTE 15 . continued

for the ten consecutive trading days immediately preceding the date of valuation of the Unit.  As of April 30, 2011 and 2010, the aggregate redemption value of the then-outstanding UPREIT Units of the operating partnership owned by limited partners was approximately $188.0 million and $180.3 million, respectively.

Joint Venture Buy/Sell Options.  Certain of IRET's 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 the Company buy its partners' interests. IRET has one joint venture which allows IRET's unaffiliated partner, at its election, to require that IRET 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 the consolidated balance sheets at the greater of their carrying amount or redemption value at the end of each reporting period. The Company has 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 the unaffiliated partner requiring IRET to buy their interest is not currently determinable.

Pending Acquisitions.  As of April 30, 2011, the Company had signed purchase agreements to acquire the following properties; all of these pending acquisitions are subject to various closing conditions and contingencies, and no assurances can be given that any of these acquisitions will be completed:

A 147-unit multi-family residential property in St. Cloud, Minnesota for a purchase price totaling approximately $10.9 million, of which approximately $7.2 million would consist of the assumption of existing debt, with the remaining approximately $3.7 million paid in cash (approximately $2.2 million) and by the issuance of limited partnership units of the Operating Partnership valued at approximately $1.5 million; and

Six senior housing projects located in Boise, Idaho and towns surrounding Boise, with a total of approximately 209 units, for a total purchase price of approximately $29.5 million.  The Company has solicited multiple offers for debt placement and currently expects that this acquisition will close in the second quarter of the current fiscal year.

Development Projects.   The Company has various contracts outstanding with third parties in connection with ongoing development projects.  As of April 30, 2011, contractual commitments for development projects are as follows:

Multi-Family Conversion, Minot, North Dakota: The Company is planning to convert an existing approximately 15,000 square foot commercial office building in Minot, North Dakota to a 24-unit multi-family residential property, for an estimated total cost of $2.2 million. As of April 30, 2011, the Company had incurred approximately $280,000 of these project costs. Work on this project has been postponed, as Company employees and other resources are directed to the supervision of repairs at Company properties damaged by the recent flooding in Minot, North Dakota.

Buffalo Mall Theaters, Jamestown, North Dakota: The Company committed to fund the construction of six movie theaters at its existing Buffalo Mall property in Jamestown, North Dakota, for an estimated construction cost of $2.1 million and expected completion in the first quarter of fiscal year 2012.  As of April 30, 2011, the Company had incurred approximately $1.5 million of these construction costs. A certificate of occupancy was issued for this project in June 2011.

Senior Housing Memory Care Conversion and Additional Assisted Living Units, Wyoming: The Company has committed and funded construction and remodeling costs to convert a portion of  the Company's existing Wyoming senior housing facility at Cheyenne, Wyoming to incorporate a specialized memory care unit. In the third quarter of fiscal year 2011, the Company had incurred $309,000, the total expected cost of the memory-care conversion.  A certificate of occupancy for the memory care unit was issued in March 2011. Additionally, the Company is currently constructing an additional approximately 28 assisted living units and 16 memory care units at its existing Meadow Wind senior housing facility in Casper, Wyoming. The Company estimates that construction costs for this expansion project will total approximately $4.5 million and the project will be completed in the second quarter of fiscal year 2012.

2011 Annual Report F-28

NOTE 15 . continued

Trinity Hospital Build-to-Suit, Minot, North Dakota: The Company has committed to construct an approximately 25,000 square-foot, one-story medical clinic for Trinity Health, a non-profit healthcare organization based in Minot, North Dakota, on land owned by the Company adjacent to the Company's existing headquarters building in Minot. Construction of this build-to-suit facility began in the second quarter of fiscal year 2011, with completion and occupancy by Trinity expected in the second quarter of fiscal year 2012.  Estimated total project costs (excluding the value of the land) are $7.4 million, of which, as of April 30, 2011, the Company had incurred approximately $4.8 million.

In addition to the above contractually committed development projects, the Company is also renovating and upgrading the eight existing condominium units at its Georgetown Square Condominium project in Grand Chute, Wisconsin (formerly known as Fox River).  The Company is evaluating the construction of additional units, based on market needs.  The Company estimates total renovation costs for the existing eight units at a maximum of $280,000.

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SUBSEQUENT EVENTS

12 Months Ended

Apr. 30, 2011

Notes To Financial Statements [Abstract]

SUBSEQUENT EVENTS

NOTE 20 . SUBSEQUENT EVENTS

Common and Preferred Share Distributions. On June 30, 2011, 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, 2011. On July 1, 2011, 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, 2011. Subsequent to the end of fiscal year 2011, the Company's Board of Trustees approved a plan to reduce the Company's quarterly distribution to $0.1300 from $0.1715 per common share and limited partnership unit, effective with the next quarterly distribution planned for October 3, 2011.  The Board currently intends to maintain this level of cash distribution for at least the next four quarters.  All future distributions remain subject to the discretion of the Company's Board of Trustees.

Pending Acquisitions.  Subsequent to the end of fiscal year 2011, the Company signed purchase agreements to acquire the following properties; all of these pending acquisitions are subject to various closing conditions and contingencies, and no assurances can be given that any of these acquisitions will be completed:

Two multi-family residential projects in Billings, Montana with a total of 36 units, for a purchase price totaling approximately $2.1 million, of which approximately $2.0 million would be paid through the issuance of limited partnership units of the Operating Partnership; and

Two multi-family residential properties in Sioux Falls, South Dakota, with 50 units and 24 units, respectively, for purchase prices of $4.7 million and $2.3 million, respectively, to be paid in cash.

Subsequent to the end of fiscal year 2011, the Company terminated its previously-disclosed agreement for the purchase of a retail property located in Robbinsdale, Minnesota.

2011 Annual Report F-31

NOTE 20 . continued

Development Project.  In addition to the ongoing development projects discussed in Note 15 above, subsequent to the end of fiscal year 2011, in June 2011, the Company commenced construction on an approximately 159-unit apartment project in Rochester, Minnesota, located adjacent to its existing Quarry Ridge Apartment Homes.  The Company currently estimates that construction costs will total approximately $19.4 million, and that the project will be completed in approximately 14 months.

Flood Damage. The Company has two properties in Minot, North Dakota that were directly affected by the recent extensive Souris River flooding.  The Company's Arrowhead Shopping Center and Chateau Apartments were flooded in late June 2011. The Company carries flood insurance covering both properties, with a total deductible of $200,000.  The approximately 78,095 net rentable square foot Arrowhead Shopping Center has an investment cost (initial cost plus improvements) of approximately $7.2 million, and was 100.0% occupied as of April 30, 2011.  The building is insured for $7.5 million in building value, plus an additional $250,000 or 20% of the amount of damage from which such costs resulted, whichever is greater, for debris removal.  Additionally, the Company is insured for loss of rents at the property for one year.  Total gross revenue from the Arrowhead Shopping Center in fiscal year 2011 was approximately $711,000.

The 64-unit Chateau Apartment building has an investment cost of approximately $3.6 million, and was 98.4% occupied as of April 30, 2011.  The building is insured for $4.5 million in building value, plus an additional $250,000 or 20% of the amount of damage from which such costs resulted, whichever is greater, for debris removal.  Additionally, the Company is insured for loss of rents at the property for one year.  Total gross revenue from the Chateau Apartments in fiscal year 2011 was approximately $648,000.  The Company had been in the process of refinancing its mortgage on the Chateau Apartment property, which matured on July 1, 2011; the Company instead paid off the $1.7 million mortgage using available cash.

The Company continues to monitor closely its Cottonwood and Westwood Apartments in Bismarck, North Dakota, both of which have been sandbagged as the Missouri River in Bismarck continues at high levels in June and July 2011.  The Company's Arbor Apartments in South Sioux City, Nebraska are also being closely monitored, as Missouri River flood risk continues there.  The Company currently does not expect material financial or operational disruptions due to these above-described flood incidents and flood risk.

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Apr. 30, 2011	Apr. 30, 2010	Apr. 30, 2009
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income	$ 24,351	$ 4,585	$ 10,713
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	61,344	61,184	57,832
Gain on sale of real estate, land and other investments	(19,365)	(68)	(54)
Gain on involuntary conversion	0	(1,660)	0
Impairment of real estate investments	0	1,678	338
Donation of real estate investments	0	450	0
Bad debt expense	733	1,399	2,472
Changes in other assets and liabilities:
Increase in receivable arising from straight-lining of rents	(1,732)	(1,443)	(2,403)
Increase in accounts receivable	(914)	(3,371)	(603)
Increase in prepaid and other assets	(1,162)	(138)	(702)
Decrease (increase) in tax, insurance and other escrow	1,469	(2,040)	1,381
Increase in deferred charges and leasing costs	(6,501)	(4,731)	(5,686)
Increase (decrease) in accounts payable, accrued expenses and other liabilities	551	5,567	(3,153)
Net cash provided by operating activities	58,774	61,412	60,135
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from real estate deposits	2,766	2,588	3,645
Payments for real estate deposits	(2,579)	(3,016)	(2,354)
Principal proceeds on mortgage loans receivable	2	2	389
Proceeds from sale of marketable securities - available-for-sale	95	0	0
Purchase of marketable securities available-for-sale	(300)	0	0
Increase in lender holdbacks for improvements	(7,436)	0	0
Proceeds from sale of real estate - discontinued operations	81,539	103	68
Proceeds from sale of real estate and other investments	74	40	0
Insurance proceeds received	347	1,395	2,962
Payments for acquisitions and improvements of real estate investments	(62,824)	(80,069)	(59,077)
Net cash provided (used) by investing activities	11,684	(78,957)	(54,367)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from mortgages payable	139,947	166,490	73,530
Principal payments on mortgages payable	(213,658)	(180,482)	(67,230)
Principal payments on revolving lines of credit and other debt	(25,650)	(15,567)	(14,073)
Proceeds from revolving lines of credit and other debt	56,300	15,500	20,500
Proceeds from sale of common shares, net of issue costs	19,598	108,271	5,978
Repurchase of fractional shares and partnership units	(10)	(11)	(10)
Net (payments) proceeds from noncontrolling partner - consolidated real estate entities	(425)	(475)	717
Distributions paid to common shareholders, net of reinvestment of $10,627, $9,762 and $10,603, respectively	(43,234)	(37,323)	(29,009)
Distributions paid to preferred shareholders	(2,372)	(2,372)	(2,372)
Distributions paid to noncontrolling interests - Unitholders of the Operating Partnership, net reinvestment of $746, $772 and $782, respectively	(13,057)	(13,489)	(13,601)
Distributions paid to noncontrolling interests - consolidated real estate entities	(1,055)	(1,273)	(165)
Distributions paid to redeemable noncontrolling interests - consolidated real estate entities	(442)	(177)	(112)
Redemption of partnership units	0	0	(158)
Net cash (used) provided by financing activities	(84,058)	39,092	(26,005)
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS	(13,600)	21,547	(20,237)
CASH AND CASH EQUIVALENTS AT END OF YEAR	54,791	33,244	53,481
CASH AND CASH EQUIVALENTS AT END OF PERIOD	41,191	54,791	33,244
SUPPLEMENTARY SCHEDULE OF NON-CASH INVESTING AND FINANCING
Distribution reinvestment plan	10,627	9,762	10,603
Operating partnership distribution reinvestment plan	746	772	782
Assets acquired through the issuance of operating partnership units	4,996	3,897	3,730
Operating partnership units converted to shares	6,905	3,755	5,034
Real estate investment acquired through assumption of indebtedness and accrued costs	9,895	2,569	0
Adjustments to accounts payable included within real estate investments	933	324	(90)
Fair value adjustments to redeemable noncontrolling interests	370	(192)	6
Cash paid during the year for:
Interest on mortgages	63,163	67,234	67,947
Interest other	1,399	682	421
Cash paid during the period, total	$ 64,562	$ 67,916	$ 68,368

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PROPERTY OWNED

12 Months Ended

Apr. 30, 2011

Notes To Financial Statements [Abstract]

PROPERTY OWNED

NOTE 4 . PROPERTY OWNED

Property, consisting principally of real estate, is stated at cost less accumulated depreciation and totaled $1.4 billion and $1.5 billion as of April 30, 2011, and  2010, respectively.

Construction period interest of approximately $152,000, $19,000, and $912,000 has been capitalized for the years ended April 30, 2011, 2010, and 2009, respectively.

The future minimum lease receipts to be received under non-cancellable leases for commercial properties as of April 30, 2011, assuming that no options to renew or buy out the lease are exercised, are as follows:

Year Ended April 30,	(in thousands)
2012	$	111,017
2013		100,265
2014		88,497
2015		75,722
2016		64,316
Thereafter		302,096
	$	741,913

During fiscal year 2011, the Company incurred no losses due to impairment. 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 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.

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Document Information	12 Months Ended
	Apr. 30, 2011
Document Type	8-K
Amendment Flag	false
Document Period End Date	Apr. 30, 2011

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RETIREMENT PLANS

12 Months Ended

Apr. 30, 2011

Notes To Financial Statements [Abstract]

RETIREMENT PLANS

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 $598,000 in fiscal year 2011, $400,000 in fiscal year 2010 and $356,000 in fiscal year 2009.