NOTE 12 • SUBSEQUENT EVENTS

Preferred Share Offering. On August 7, 2012, the Company completed the public offering of 4.6 million Series B Cumulative Redeemable Preferred Shares of Beneficial Interest ("Series B preferred shares") at a price of $25.00 per share for net proceeds of approximately $111.2 million after underwriting discounts and estimated offering expenses. These shares are nonvoting and redeemable for cash at $25.00 per share at the Company's option on or after August 7, 2017. Holders of these shares are entitled to cumulative distributions, payable quarterly (as and if declared by the Board of Trustees). Distributions accrue at an annual rate of $1.9875 per share, which is equal to 7.95% of the $25.00 per share liquidation preference ($115.0 million liquidation preference in the aggregate). The Company contributed the net proceeds from the sale to the Operating Partnership in exchange for 4.6 million Series B preferred units, which carry terms that are substantially the same as the Series B preferred shares. The Operating Partnership will use the proceeds of the public offering for general business purposes, including the acquisition, development, renovation, expansion and improvement of income-producing real estate properties and debt repayment. On August 7, 2012, the Operating Partnership used a portion of the proceeds of the offering of Series B preferred shares to repay $34.5 million in borrowings under its multi-bank line of credit, reducing outstanding borrowings under the line of credit from $44.5 million to $10.0 million.

Common and Preferred Share Distributions. On September 4, 2012, the Company's Board of Trustees declared a regular quarterly distribution of 13.00 cents per share and unit on the Company's common shares of beneficial interest and the limited partnership units of IRET Properties, payable October 1, 2012 to common shareholders and unitholders of record on September 17, 2012. Also on September 4, 2012, the Company's Board of Trustees declared a distribution of 51.56 cents per share on the Company's Series A preferred shares of beneficial interest, payable October 1, 2012 to Series A preferred shareholders of record on September 17, 2012, and declared an initial, pro-rated distribution of 33.12 cents per share on the Company's Series B preferred shares of beneficial interest, payable October 1, 2012 to Series B preferred shareholders of record on September 17, 2012. Subsequent distributions on the Series B preferred shares are payable quarterly in arrears in the amount of 49.68 cents per share.

Completed Acquisitions. Subsequent to the end of the first quarter of fiscal year 2013, the Company closed on its acquisition of two parcels of vacant land, in Williston, North Dakota and in St. Cloud, Minnesota, respectively. The Company paid approximately $823,000 in cash on August 1, 2012 to acquire the approximately 2.6 acre Williston, North Dakota land parcel, and paid $447,000 in cash on August 10, 2012 to acquire the approximately 3.8 acre St. Cloud, Minnesota land parcel. The unimproved land parcels were acquired for future development. The purchase price accounting is incomplete for the acquisitions that closed subsequent to July 31, 2012.

Pending Acquisitions. The Company has signed purchase agreements to acquire the following properties:

·	a two building, 58-unit multi-family residential property in Sartell, Minnesota on approximately 6.5 acres of land, for a purchase price totaling $5.1 million, to be paid in cash; and

·	a four-building, 204-unit multi-family residential property in Billings, Montana on approximately 8.9 acres of land, for a purchase price totaling $20.0 million, to be paid in cash.

Both of these pending acquisitions are subject to various closing conditions and contingencies, and no assurances can be given that either of these transactions will be completed.

Pending Dispositions. The Company has signed agreements to sell the following properties:

·	the Company's 85-unit Prairiewood Meadows Apartments property in Fargo, North Dakota;

·	the 116-unit Terrace on the Green Apartments property in Moorehead, Minnesota; and

·	the 66-unit Candlelight Apartments property in Fargo, North Dakota.

The Company currently projects total gross proceeds from these three sales of approximately $2.8 million; however, these pending dispositions are subject to various closing conditions and contingencies, and no assurances can be given that any or all of these three transactions will be completed on the terms currently expected, or at all.

Development Projects. During the second quarter of fiscal year 2013, the Company began construction of its 146-unit River Ridge Apartments project in Bismarck, North Dakota. River Ridge is located near IRET's Cottonwood Apartments in Bismarck, and will offer amenities including a pool, exercise facility and underground parking. The Company estimates that the total cost to construct the project will be approximately $24.2 million, including the cost of the land plus imputed construction interest. Completion of the project is currently expected in the second quarter of the Company's fiscal year 2014.

In August 2012, the Company entered into a joint venture agreement with a real estate development and contracting company in St. Cloud, Minnesota, to construct a two-building, 132-unit multi-family residential property in St. Cloud, Minnesota, for an estimated total project cost of $14.3 million. The Company owns approximately 79% of the joint venture entity, with the remaining approximately 21% owned by its joint venture partner. Completion of the apartment project is currently expected in fourth quarter of the Company's fiscal year 2014.