North Dakota
|
45-0311232
|
(State or other jurisdiction of
|
(I.R.S. Employer Identification No.)
|
incorporation or organization)
|
|
1400 31st Avenue SW, Suite 60
|
|
Post Office Box 1988
|
|
Minot, ND 58702-1988
|
|
(Address of principal executive offices) (Zip code)
|
|
Yes R
|
No £
|
|
Yes R
|
No £
|
|
Large accelerated filer £
|
Accelerated filer R
|
|
Non-accelerated filer £
|
Smaller Reporting Company £
|
|
Yes £
|
No R
|
|
Page
|
Part I. Financial Information
|
|
Item 1. Financial Statements - Third Quarter - Fiscal 2013:
|
3
|
Condensed Consolidated Balance Sheets (unaudited)
|
3
|
January 31, 2013 and April 30, 2012
|
|
Condensed Consolidated Statements of Operations (unaudited)
|
4
|
For the Three and Nine Months ended January 31, 2013 and 2012
|
|
Condensed Consolidated Statements of Equity (unaudited)
|
5
|
For the Nine Months ended January 31, 2013 and 2012
|
|
Condensed Consolidated Statements of Cash Flows (unaudited)
|
6
|
For the Nine Months ended January 31, 2013 and 2012
|
|
Notes to Condensed Consolidated Financial Statements (unaudited)
|
8
|
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
|
25
|
Item 3. Quantitative and Qualitative Disclosures About Market Risk
|
49
|
Item 4. Controls and Procedures
|
49
|
|
|
Part II. Other Information
|
|
Item 1. Legal Proceedings
|
50
|
Item 1A. Risk Factors
|
50
|
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
|
50
|
Item 3. Defaults Upon Senior Securities
|
50
|
Item 4. Mine Safety Disclosures
|
50
|
Item 5. Other Information
|
50
|
Item 6. Exhibits
|
50
|
Signatures
|
51
|
|
(in thousands, except share data)
|
|||||||
|
January 31, 2013
|
April 30, 2012
|
||||||
ASSETS
|
||||||||
Real estate investments
|
||||||||
Property owned
|
$
|
2,007,832
|
$
|
1,892,009
|
||||
Less accumulated depreciation
|
(408,400
|
)
|
(373,490
|
)
|
||||
|
1,599,432
|
1,518,519
|
||||||
Development in progress
|
20,127
|
27,599
|
||||||
Unimproved land
|
18,879
|
10,990
|
||||||
Total real estate investments
|
1,638,438
|
1,557,108
|
||||||
Real estate held for sale
|
733
|
2,067
|
||||||
Cash and cash equivalents
|
62,302
|
39,989
|
||||||
Other investments
|
638
|
634
|
||||||
Receivable arising from straight-lining of rents, net of allowance of $1,310 and $1,209, respectively
|
25,471
|
23,273
|
||||||
Accounts receivable, net of allowance of $459 and $154, respectively
|
3,560
|
7,052
|
||||||
Real estate deposits
|
165
|
263
|
||||||
Prepaid and other assets
|
5,545
|
3,703
|
||||||
Intangible assets, net of accumulated amortization of $26,599 and $47,813, respectively
|
41,009
|
44,588
|
||||||
Tax, insurance, and other escrow
|
13,306
|
11,669
|
||||||
Property and equipment, net of accumulated depreciation of $1,598 and $1,423, respectively
|
1,288
|
1,454
|
||||||
Goodwill
|
1,106
|
1,120
|
||||||
Deferred charges and leasing costs, net of accumulated amortization of $17,574 and $16,244, respectively
|
22,513
|
21,447
|
||||||
TOTAL ASSETS
|
$
|
1,816,074
|
$
|
1,714,367
|
||||
|
||||||||
LIABILITIES AND EQUITY
|
||||||||
LIABILITIES
|
||||||||
Accounts payable and accrued expenses
|
$
|
44,540
|
$
|
47,403
|
||||
Revolving line of credit
|
10,000
|
39,000
|
||||||
Mortgages payable
|
1,041,623
|
1,048,689
|
||||||
Other
|
21,632
|
14,012
|
||||||
TOTAL LIABILITIES
|
1,117,795
|
1,149,104
|
||||||
COMMITMENTS AND CONTINGENCIES (NOTE 6)
|
||||||||
EQUITY
|
||||||||
Investors Real Estate Trust shareholders' equity
|
||||||||
Series A Preferred Shares of Beneficial Interest (Cumulative redeemable preferred shares, no par value, 1,150,000 shares issued and outstanding at January 31, 2013 and April 30, 2012, aggregate liquidation preference of $28,750,000)
|
27,317
|
27,317
|
||||||
Series B Preferred Shares of Beneficial Interest (Cumulative redeemable preferred shares, no par value, 4,600,000 and 0 shares issued and outstanding at January 31, 2013 and April 30, 2012, respectively, aggregate liquidation preference of $115,000,000)
|
111,357
|
0
|
||||||
Common Shares of Beneficial Interest (Unlimited authorization, no par value, 94,386,198 shares issued and outstanding at January 31, 2013, and 89,473,838 shares issued and outstanding at April 30, 2012)
|
721,742
|
684,049
|
||||||
Accumulated distributions in excess of net income
|
(305,145
|
)
|
(278,377
|
)
|
||||
Total Investors Real Estate Trust shareholders' equity
|
555,271
|
432,989
|
||||||
Noncontrolling interests – Operating Partnership (21,489,458 units at January 31, 2013 and 20,332,415 units at April 30, 2012)
|
121,940
|
118,710
|
||||||
Noncontrolling interests – consolidated real estate entities
|
21,068
|
13,564
|
||||||
Total equity
|
698,279
|
565,263
|
||||||
TOTAL LIABILITIES AND EQUITY
|
$
|
1,816,074
|
$
|
1,714,367
|
|
(in thousands, except per share data)
|
|||||||||||||||
|
Three Months Ended
January 31
|
Nine Months Ended
January 31
|
||||||||||||||
|
2013
|
2012
|
2013
|
2012
|
||||||||||||
REVENUE
|
||||||||||||||||
Real estate rentals
|
$
|
54,307
|
$
|
49,859
|
$
|
159,026
|
$
|
147,663
|
||||||||
Tenant reimbursement
|
11,924
|
10,687
|
34,134
|
32,247
|
||||||||||||
TOTAL REVENUE
|
66,231
|
60,546
|
193,160
|
179,910
|
||||||||||||
EXPENSES
|
||||||||||||||||
Depreciation/amortization related to real estate investments
|
15,506
|
14,280
|
46,602
|
42,470
|
||||||||||||
Utilities
|
4,759
|
4,457
|
13,816
|
13,249
|
||||||||||||
Maintenance
|
7,692
|
6,338
|
21,545
|
19,991
|
||||||||||||
Real estate taxes
|
8,730
|
7,993
|
25,358
|
23,374
|
||||||||||||
Insurance
|
1,070
|
876
|
2,932
|
2,514
|
||||||||||||
Property management expenses
|
4,124
|
4,926
|
12,369
|
15,631
|
||||||||||||
Administrative expenses
|
2,092
|
1,493
|
5,970
|
5,356
|
||||||||||||
Advisory and trustee services
|
153
|
166
|
432
|
588
|
||||||||||||
Other expenses
|
464
|
359
|
1,496
|
1,509
|
||||||||||||
Amortization related to non-real estate investments
|
794
|
903
|
2,426
|
2,395
|
||||||||||||
TOTAL EXPENSES
|
45,384
|
41,791
|
132,946
|
127,077
|
||||||||||||
Gain on involuntary conversion
|
0
|
0
|
2,263
|
0
|
||||||||||||
Operating income
|
20,847
|
18,755
|
62,477
|
52,833
|
||||||||||||
Interest expense
|
(15,725
|
)
|
(16,411
|
)
|
(48,448
|
)
|
(48,389
|
)
|
||||||||
Interest income
|
70
|
25
|
176
|
115
|
||||||||||||
Other income
|
185
|
254
|
424
|
530
|
||||||||||||
Income from continuing operations
|
5,377
|
2,623
|
14,629
|
5,089
|
||||||||||||
Income (loss) from discontinued operations
|
776
|
(102
|
)
|
3,530
|
496
|
|||||||||||
NET INCOME
|
6,153
|
2,521
|
18,159
|
5,585
|
||||||||||||
Net income attributable to noncontrolling interests – Operating Partnership
|
(556
|
)
|
(351
|
)
|
(2,097
|
)
|
(723
|
)
|
||||||||
Net income attributable to noncontrolling interests – consolidated real estate entities
|
(273
|
)
|
(43
|
)
|
(547
|
)
|
(29
|
)
|
||||||||
Net income attributable to Investors Real Estate Trust
|
5,324
|
2,127
|
15,515
|
4,833
|
||||||||||||
Dividends to preferred shareholders
|
(2,879
|
)
|
(593
|
)
|
(6,350
|
)
|
(1,779
|
)
|
||||||||
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS
|
$
|
2,445
|
$
|
1,534
|
$
|
9,165
|
$
|
3,054
|
||||||||
Earnings per common share from continuing operations – Investors Real Estate Trust – basic and diluted
|
.02
|
.02
|
.07
|
.03
|
||||||||||||
Earnings per common share from discontinued operations – Investors Real Estate Trust – basic and diluted
|
.01
|
.00
|
.03
|
.01
|
||||||||||||
NET INCOME PER COMMON SHARE – BASIC AND DILUTED
|
$
|
.03
|
$
|
.02
|
$
|
.10
|
$
|
.04
|
||||||||
DIVIDENDS PER COMMON SHARE
|
$
|
.1300
|
$
|
.1300
|
$
|
.3900
|
$
|
.4315
|
|
(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, 2011
|
1,150
|
$
|
27,317
|
80,523
|
$
|
621,936
|
$
|
(237,563
|
)
|
$
|
132,600
|
$
|
544,290
|
|||||||||||||||
Net income attributable to Investors Real Estate Trust and nonredeemable noncontrolling interests
|
4,833
|
740
|
5,573
|
|||||||||||||||||||||||||
Distributions – common shares and units
|
(35,433
|
)
|
(8,513
|
)
|
(43,946
|
)
|
||||||||||||||||||||||
Distributions – Series A preferred shares
|
(1,779
|
)
|
(1,779
|
)
|
||||||||||||||||||||||||
Distribution reinvestment and share purchase plan
|
3,992
|
28,831
|
28,831
|
|||||||||||||||||||||||||
Shares issued
|
471
|
3,413
|
3,413
|
|||||||||||||||||||||||||
Partnership units issued
|
2,469
|
2,469
|
||||||||||||||||||||||||||
Redemption of units for common shares
|
759
|
3,454
|
(3,454
|
)
|
0
|
|||||||||||||||||||||||
Contributions from noncontrolling interests – consolidated real estate entities
|
2,227
|
2,227
|
||||||||||||||||||||||||||
Other
|
(2
|
)
|
(330
|
)
|
(586
|
)
|
(916
|
)
|
||||||||||||||||||||
Balance January 31, 2012
|
1,150
|
$
|
27,317
|
85,743
|
$
|
657,304
|
$
|
(269,942
|
)
|
$
|
125,483
|
$
|
540,162
|
|||||||||||||||
|
||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||
Balance April 30, 2012
|
1,150
|
$
|
27,317
|
89,474
|
$
|
684,049
|
$
|
(278,377
|
)
|
$
|
132,274
|
$
|
565,263
|
|||||||||||||||
Net income attributable to Investors Real Estate Trust and nonredeemable noncontrolling interests
|
15,515
|
2,644
|
18,159
|
|||||||||||||||||||||||||
Distributions – common shares and units
|
(35,933
|
)
|
(8,193
|
)
|
(44,126
|
)
|
||||||||||||||||||||||
Distributions – Series A preferred shares
|
(1,779
|
)
|
(1,779
|
)
|
||||||||||||||||||||||||
Distributions – Series B preferred shares
|
(4,571
|
)
|
(4,571
|
)
|
||||||||||||||||||||||||
Distribution reinvestment and share purchase plan
|
4,315
|
34,072
|
34,072
|
|||||||||||||||||||||||||
Shares issued
|
396
|
2,846
|
2,846
|
|||||||||||||||||||||||||
Series B preferred shares issued
|
4,600
|
111,357
|
111,357
|
|||||||||||||||||||||||||
Partnership units issued
|
10,116
|
10,116
|
||||||||||||||||||||||||||
Redemption of units for common shares
|
203
|
846
|
(846
|
)
|
0
|
|||||||||||||||||||||||
Contributions from noncontrolling interests – consolidated real estate entities
|
7,068
|
7,068
|
||||||||||||||||||||||||||
Other
|
(2
|
)
|
(71
|
)
|
(55
|
)
|
(126
|
)
|
||||||||||||||||||||
Balance January 31, 2013
|
5,750
|
$
|
138,674
|
94,386
|
$
|
721,742
|
$
|
(305,145
|
)
|
$
|
143,008
|
$
|
698,279
|
|
(in thousands)
|
|||||||
|
Nine Months Ended
January 31
|
|||||||
|
2013
|
2012
|
||||||
CASH FLOWS FROM OPERATING ACTIVITIES
|
||||||||
Net income
|
$
|
18,159
|
$
|
5,585
|
||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||
Depreciation and amortization
|
50,475
|
46,328
|
||||||
Gain on sale of real estate, land, other investments and discontinued operations
|
(3,452
|
)
|
(589
|
)
|
||||
Gain on involuntary conversion
|
(2,263
|
)
|
0
|
|||||
Impairment of real estate investments
|
0
|
135
|
||||||
Bad debt expense
|
893
|
771
|
||||||
Changes in other assets and liabilities:
|
||||||||
Increase in receivable arising from straight-lining of rents
|
(2,319
|
)
|
(3,370
|
)
|
||||
Decrease in accounts receivable
|
1,969
|
946
|
||||||
Increase in prepaid and other assets
|
(1,846
|
)
|
(1,756
|
)
|
||||
Increase in tax, insurance and other escrow
|
(1,189
|
)
|
(901
|
)
|
||||
Increase in deferred charges and leasing costs
|
(4,705
|
)
|
(5,480
|
)
|
||||
(Decrease) increase in accounts payable, accrued expenses, and other liabilities
|
(478
|
)
|
2,759
|
|||||
Net cash provided by operating activities
|
55,244
|
44,428
|
||||||
CASH FLOWS FROM INVESTING ACTIVITIES
|
||||||||
Proceeds from real estate deposits
|
1,193
|
1,640
|
||||||
Payments for real estate deposits
|
(1,095
|
)
|
(1,889
|
)
|
||||
Principal proceeds on mortgage loans receivable
|
0
|
159
|
||||||
Increase in other investments
|
0
|
(8
|
)
|
|||||
Decrease in lender holdbacks for improvements
|
1,514
|
5,056
|
||||||
Increase in lender holdbacks for improvements
|
(1,962
|
)
|
(315
|
)
|
||||
Proceeds from sale of discontinued operations
|
3,909
|
2,088
|
||||||
Proceeds from sale of real estate and other investments
|
45
|
438
|
||||||
Insurance proceeds received
|
3,455
|
5,644
|
||||||
Payments for acquisitions and improvements of real estate assets
|
(103,002
|
)
|
(101,791
|
)
|
||||
Net cash used by investing activities
|
(95,943
|
)
|
(88,978
|
)
|
||||
CASH FLOWS FROM FINANCING ACTIVITIES
|
||||||||
Proceeds from mortgages payable
|
57,030
|
84,195
|
||||||
Principal payments on mortgages payable
|
(84,359
|
)
|
(53,661
|
)
|
||||
Proceeds from revolving line of credit and other debt
|
26,854
|
24,227
|
||||||
Principal payments on revolving line of credit and other debt
|
(34,550
|
)
|
(60
|
)
|
||||
Proceeds from sale of common shares, net of issue costs
|
2,448
|
2,970
|
||||||
Proceeds from sale of common shares under distribution reinvestment and share purchase program
|
24,300
|
20,778
|
||||||
Proceeds from underwritten Public Offering of Preferred Shares – Series B, net of offering costs
|
111,357
|
0
|
||||||
Repurchase of fractional shares and partnership units
|
(15
|
)
|
(13
|
)
|
||||
Payments for acquisition of noncontrolling interests – consolidated real estate entities
|
0
|
(1,289
|
)
|
|||||
Distributions paid to common shareholders, net of reinvestment of $9,307 and $7,548, respectively
|
(26,626
|
)
|
(27,885
|
)
|
||||
Distributions paid to preferred shareholders
|
(5,588
|
)
|
(1,779
|
)
|
||||
Distributions paid to noncontrolling interests – Unitholders of the Operating Partnership, net of reinvestment of $465 and $504, respectively
|
(7,728
|
)
|
(8,009
|
)
|
||||
Distributions paid to noncontrolling interests – consolidated real estate entities
|
(111
|
)
|
(586
|
)
|
||||
Distributions paid to redeemable noncontrolling interests – consolidated real estate entities
|
0
|
(27
|
)
|
|||||
Net cash provided by financing activities
|
63,012
|
38,861
|
||||||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
22,313
|
(5,689
|
)
|
|||||
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
|
39,989
|
41,191
|
||||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD
|
$
|
62,302
|
$
|
35,502
|
|
(in thousands)
|
|||||||
|
Nine Months Ended
January 31
|
|||||||
|
2013
|
2012
|
||||||
SUPPLEMENTARY SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES FOR THE PERIOD
|
||||||||
Distribution reinvestment plan
|
$
|
9,307
|
$
|
7,548
|
||||
Operating partnership distribution reinvestment plan
|
465
|
504
|
||||||
Operating partnership units converted to shares
|
846
|
3,454
|
||||||
Shares issued under the Incentive Award Plan
|
398
|
443
|
||||||
Real estate assets acquired through the issuance of operating partnership units
|
10,116
|
2,469
|
||||||
Real estate assets acquired through assumption of indebtedness and accrued costs
|
12,500
|
7,190
|
||||||
Mortgages included in real estate dispositions
|
5,887
|
0
|
||||||
Decrease to accounts payable included within real estate investments
|
(2,868
|
)
|
(3,244
|
)
|
||||
Land contributed by noncontrolling interests – consolidated real estate entities
|
7,068
|
2,227
|
||||||
Fair value adjustments to redeemable noncontrolling interests
|
0
|
35
|
||||||
Involuntary conversion of assets due to flood and fire damage
|
107
|
2,638
|
||||||
Construction debt reclassified to mortgages payable
|
13,650
|
7,190
|
||||||
|
||||||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
|
||||||||
Cash paid during the period for:
|
||||||||
Interest on mortgages
|
46,276
|
45,321
|
||||||
Interest other
|
1,020
|
2,098
|
||||||
|
$
|
47,296
|
$
|
47,419
|
|
(in thousands)
|
|||||||
|
January 31, 2013
|
April 30, 2012
|
||||||
Identified intangible assets (included in intangible assets):
|
||||||||
Gross carrying amount
|
$
|
67,608
|
$
|
92,401
|
||||
Accumulated amortization
|
(26,599
|
)
|
(47,813
|
)
|
||||
Net carrying amount
|
$
|
41,009
|
$
|
44,588
|
||||
|
||||||||
Identified intangible liabilities (included in other liabilities):
|
||||||||
Gross carrying amount
|
$
|
391
|
$
|
1,104
|
||||
Accumulated amortization
|
(288
|
)
|
(967
|
)
|
||||
Net carrying amount
|
$
|
103
|
$
|
137
|
Year Ended April 30,
|
(in thousands)
|
|||
2014
|
$
|
37
|
||
2015
|
18
|
|||
2016
|
14
|
|||
2017
|
6
|
|||
2018
|
(5
|
)
|
Year Ended April 30,
|
(in thousands)
|
|||
2014
|
$
|
4,146
|
||
2015
|
3,825
|
|||
2016
|
3,608
|
|||
2017
|
3,139
|
|||
2018
|
2,652
|
|
(in thousands, except per share data)
|
|||||||||||||||
|
Three Months Ended
January 31
|
Nine Months Ended
January 31
|
||||||||||||||
|
2013
|
2012
|
2013
|
2012
|
||||||||||||
NUMERATOR
|
||||||||||||||||
Income from continuing operations – Investors Real Estate Trust
|
$
|
4,691
|
$
|
2,210
|
$
|
12,642
|
$
|
4,434
|
||||||||
Income (loss) from discontinued operations – Investors Real Estate Trust
|
633
|
(83
|
)
|
2,873
|
399
|
|||||||||||
Net income attributable to Investors Real Estate Trust
|
5,324
|
2,127
|
15,515
|
4,833
|
||||||||||||
Dividends to preferred shareholders
|
(2,879
|
)
|
(593
|
)
|
(6,350
|
)
|
(1,779
|
)
|
||||||||
Numerator for basic earnings per share – net income available to common shareholders
|
2,445
|
1,534
|
9,165
|
3,054
|
||||||||||||
Noncontrolling interests – Operating Partnership
|
556
|
351
|
2,097
|
723
|
||||||||||||
Numerator for diluted earnings per share
|
$
|
3,001
|
$
|
1,885
|
$
|
11,262
|
$
|
3,777
|
||||||||
DENOMINATOR
|
||||||||||||||||
Denominator for basic earnings per share weighted average shares
|
93,794
|
84,339
|
92,260
|
82,424
|
||||||||||||
Effect of convertible operating partnership units
|
21,413
|
19,596
|
21,098
|
19,752
|
||||||||||||
Denominator for diluted earnings per share
|
115,207
|
103,935
|
113,358
|
102,176
|
||||||||||||
Earnings per common share from continuing operations – Investors Real Estate Trust – basic and diluted
|
$
|
.02
|
$
|
.02
|
$
|
.07
|
$
|
.03
|
||||||||
Earnings per common share from discontinued operations – Investors Real Estate Trust – basic and diluted
|
.01
|
.00
|
.03
|
.01
|
||||||||||||
NET INCOME PER COMMON SHARE – BASIC & DILUTED
|
$
|
.03
|
$
|
.02
|
$
|
.10
|
$
|
.04
|
(in thousands)
|
||||||||||||||||||||||||
Three Months Ended January 31, 2013
|
Multi-Family
Residential |
Commercial-
Office |
Commercial-
Medical |
Commercial-
Industrial |
Commercial-
Retail |
Total
|
||||||||||||||||||
|
||||||||||||||||||||||||
Real estate revenue
|
$
|
23,067
|
$
|
19,338
|
$
|
16,207
|
$
|
3,853
|
$
|
3,766
|
$
|
66,231
|
||||||||||||
Real estate expenses
|
10,344
|
9,399
|
4,129
|
1,095
|
1,408
|
26,375
|
||||||||||||||||||
Net operating income
|
$
|
12,723
|
$
|
9,939
|
$
|
12,078
|
$
|
2,758
|
$
|
2,358
|
39,856
|
|||||||||||||
Depreciation/amortization
|
(16,300
|
)
|
||||||||||||||||||||||
Administrative, advisory and trustee services
|
(2,245
|
)
|
||||||||||||||||||||||
Other expenses
|
(464
|
)
|
||||||||||||||||||||||
Interest expense
|
(15,725
|
)
|
||||||||||||||||||||||
Interest and other income
|
255
|
|||||||||||||||||||||||
Income from continuing operations
|
5,377
|
|||||||||||||||||||||||
Income from discontinued operations
|
776
|
|||||||||||||||||||||||
Net income
|
$
|
6,153
|
(in thousands)
|
||||||||||||||||||||||||
Three Months Ended January 31, 2012
|
Multi-Family
Residential |
Commercial-
Office |
Commercial-
Medical |
Commercial-
Industrial |
Commercial-
Retail |
Total
|
||||||||||||||||||
|
||||||||||||||||||||||||
Real estate revenue
|
$
|
18,400
|
$
|
18,541
|
$
|
16,610
|
$
|
3,596
|
$
|
3,399
|
$
|
60,546
|
||||||||||||
Real estate expenses
|
8,452
|
8,694
|
5,220
|
1,078
|
1,146
|
24,590
|
||||||||||||||||||
Net operating income
|
$
|
9,948
|
$
|
9,847
|
$
|
11,390
|
$
|
2,518
|
$
|
2,253
|
35,956
|
|||||||||||||
Depreciation/amortization
|
(15,183
|
)
|
||||||||||||||||||||||
Administrative, advisory and trustee services
|
(1,659
|
)
|
||||||||||||||||||||||
Other expenses
|
(359
|
)
|
||||||||||||||||||||||
Interest expense
|
(16,411
|
)
|
||||||||||||||||||||||
Interest and other income
|
279
|
|||||||||||||||||||||||
Income from continuing operations
|
2,623
|
|||||||||||||||||||||||
Loss from discontinued operations
|
(102
|
)
|
||||||||||||||||||||||
Net income
|
$
|
2,521
|
(in thousands)
|
||||||||||||||||||||||||
Nine Months Ended January 31, 2013
|
Multi-Family
Residential |
Commercial-
Office |
Commercial-
Medical |
Commercial-
Industrial |
Commercial-
Retail |
Total
|
||||||||||||||||||
|
||||||||||||||||||||||||
Real estate revenue
|
$
|
67,381
|
$
|
57,105
|
$
|
47,051
|
$
|
10,890
|
$
|
10,733
|
$
|
193,160
|
||||||||||||
Real estate expenses
|
28,646
|
28,081
|
12,395
|
3,050
|
3,848
|
76,020
|
||||||||||||||||||
Gain on involuntary conversion
|
2,263
|
0
|
0
|
0
|
0
|
2,263
|
||||||||||||||||||
Net operating income
|
$
|
40,998
|
$
|
29,024
|
$
|
34,656
|
$
|
7,840
|
$
|
6,885
|
119,403
|
|||||||||||||
Depreciation/amortization
|
(49,028
|
)
|
||||||||||||||||||||||
Administrative, advisory and trustee services
|
(6,402
|
)
|
||||||||||||||||||||||
Other expenses
|
(1,496
|
)
|
||||||||||||||||||||||
Interest expense
|
(48,448
|
)
|
||||||||||||||||||||||
Interest and other income
|
600
|
|||||||||||||||||||||||
Income from continuing operations
|
14,629
|
|||||||||||||||||||||||
Income from discontinued operations
|
3,530
|
|||||||||||||||||||||||
Net income
|
$
|
18,159
|
|
(in thousands)
|
|||||||||||||||||||||||
Nine Months Ended January 31, 2012
|
Multi-Family
Residential |
Commercial-
Office |
Commercial-
Medical |
Commercial-
Industrial |
Commercial-
Retail |
Total
|
||||||||||||||||||
|
||||||||||||||||||||||||
Real estate revenue
|
$
|
53,441
|
$
|
55,723
|
$
|
50,299
|
$
|
10,597
|
$
|
9,850
|
$
|
179,910
|
||||||||||||
Real estate expenses
|
25,124
|
26,451
|
16,709
|
3,178
|
3,297
|
74,759
|
||||||||||||||||||
Net operating income
|
$
|
28,317
|
$
|
29,272
|
$
|
33,590
|
$
|
7,419
|
$
|
6,553
|
105,151
|
|||||||||||||
Depreciation/amortization
|
(44,865
|
)
|
||||||||||||||||||||||
Administrative, advisory and trustee services
|
(5,944
|
)
|
||||||||||||||||||||||
Other expenses
|
(1,509
|
)
|
||||||||||||||||||||||
Interest expense
|
(48,389
|
)
|
||||||||||||||||||||||
Interest and other income
|
645
|
|||||||||||||||||||||||
Income from continuing operations
|
5,089
|
|||||||||||||||||||||||
Income from discontinued operations
|
496
|
|||||||||||||||||||||||
Net income
|
$
|
5,585
|
|
(in thousands)
|
|||||||||||||||||||||||
As of January 31, 2013
|
Multi-Family
Residential |
Commercial-
Office |
Commercial-
Medical |
Commercial-
Industrial |
Commercial-
Retail |
Total
|
||||||||||||||||||
|
||||||||||||||||||||||||
Segment Assets
|
||||||||||||||||||||||||
Property owned
|
$
|
626,763
|
$
|
611,174
|
$
|
513,565
|
$
|
125,431
|
$
|
130,899
|
$
|
2,007,832
|
||||||||||||
Less accumulated depreciation
|
(135,673
|
)
|
(133,861
|
)
|
(89,542
|
)
|
(22,890
|
)
|
(26,434
|
)
|
(408,400
|
)
|
||||||||||||
Net property owned
|
$
|
491,090
|
$
|
477,313
|
$
|
424,023
|
$
|
102,541
|
$
|
104,465
|
1,599,432
|
|||||||||||||
Real estate held for sale
|
733
|
|||||||||||||||||||||||
Cash and cash equivalents
|
62,302
|
|||||||||||||||||||||||
Other investments
|
638
|
|||||||||||||||||||||||
Receivables and other assets
|
113,963
|
|||||||||||||||||||||||
Development in progress
|
20,127
|
|||||||||||||||||||||||
Unimproved land
|
18,879
|
|||||||||||||||||||||||
Total assets
|
$
|
1,816,074
|
|
(in thousands)
|
|||||||||||||||||||||||
As of April 30, 2012
|
Multi-Family
Residential |
Commercial-
Office |
Commercial-
Medical |
Commercial-
Industrial |
Commercial-
Retail |
Total
|
||||||||||||||||||
|
||||||||||||||||||||||||
Segment assets
|
||||||||||||||||||||||||
Property owned
|
$
|
539,783
|
$
|
605,318
|
$
|
500,268
|
$
|
119,002
|
$
|
127,638
|
$
|
1,892,009
|
||||||||||||
Less accumulated depreciation
|
(128,834
|
)
|
(121,422
|
)
|
(78,744
|
)
|
(20,693
|
)
|
(23,797
|
)
|
(373,490
|
)
|
||||||||||||
Net property owned
|
$
|
410,949
|
$
|
483,896
|
$
|
421,524
|
$
|
98,309
|
$
|
103,841
|
1,518,519
|
|||||||||||||
Real estate held for sale
|
2,067
|
|||||||||||||||||||||||
Cash and cash equivalents
|
39,989
|
|||||||||||||||||||||||
Other investments
|
634
|
|||||||||||||||||||||||
Receivables and other assets
|
114,569
|
|||||||||||||||||||||||
Development in progress
|
27,599
|
|||||||||||||||||||||||
Unimproved land
|
10,990
|
|||||||||||||||||||||||
Total assets
|
$
|
1,714,367
|
|
Three Months Ended
January 31
|
Nine Months Ended
January 31
|
||||||||||||||
|
(in thousands)
|
|||||||||||||||
|
2013
|
2012
|
2013
|
2012
|
||||||||||||
REVENUE
|
||||||||||||||||
Real estate rentals
|
$
|
27
|
$
|
459
|
$
|
778
|
$
|
1,375
|
||||||||
Tenant reimbursement
|
0
|
18
|
0
|
54
|
||||||||||||
TOTAL REVENUE
|
27
|
477
|
778
|
1,429
|
||||||||||||
EXPENSES
|
||||||||||||||||
Depreciation/amortization related to real estate investments
|
0
|
79
|
114
|
248
|
||||||||||||
Utilities
|
4
|
69
|
67
|
175
|
||||||||||||
Maintenance
|
5
|
57
|
132
|
194
|
||||||||||||
Real estate taxes
|
3
|
56
|
78
|
154
|
||||||||||||
Insurance
|
1
|
14
|
24
|
38
|
||||||||||||
Property management expenses
|
6
|
63
|
118
|
207
|
||||||||||||
Impairment of real estate investments
|
0
|
135
|
0
|
135
|
||||||||||||
TOTAL EXPENSES
|
19
|
473
|
533
|
1,151
|
||||||||||||
Operating income
|
8
|
4
|
245
|
278
|
||||||||||||
Interest expense
|
(6
|
)
|
(122
|
)
|
(169
|
)
|
(387
|
)
|
||||||||
Other income
|
2
|
16
|
2
|
16
|
||||||||||||
Income (loss) from discontinued operations before gain on sale
|
4
|
(102
|
)
|
78
|
(93
|
)
|
||||||||||
Gain on sale of discontinued operations
|
772
|
0
|
3,452
|
589
|
||||||||||||
INCOME (LOSS) FROM DISCONTINUED OPERATIONS
|
$
|
776
|
$
|
(102
|
)
|
$
|
3,530
|
$
|
496
|
·
|
two parcels of vacant land in Rochester, Minnesota, acquired for possible future development, of approximately 20.1 acres and 3.8 acres, respectively, for purchase prices of $775,000 and $275,000, paid in cash;
|
·
|
an approximately 48.4 acre parcel of vacant land in Grand Forks, North Dakota, acquired for possible future development, for a purchase price of approximately $4.3 million, of which approximately $2.3 million was paid in cash and the remainder in limited partnership units of the Operating Partnership valued at $2.0 million;
|
·
|
an approximately 51% interest in a joint venture entity currently constructing the Southgate Apartments project in Minot, North Dakota, which project is expected to be completed in two phases, with a total of approximately 341 units, for a currently-estimated total cost of $52.2 million; and
|
·
|
a parcel of vacant land in Minot, North Dakota, acquired for possible future development for a purchase price of approximately $1.9 million; the approximately 2.2 acre parcel is adjacent to the Southgate multi-family residential project currently under development.
|
·
|
a 58-unit multi-family residential property in Sartell, Minnesota (The Ponds at Heritage Place), on approximately 6.5 acres of land, for a purchase price of approximately $5.0 million, of which $3.3 million was paid in cash and the remainder in limited partnership units of the Operating Partnership valued at $1.7 million;
|
·
|
an approximately 2.6 acre parcel of vacant land in Williston, North Dakota, acquired for possible future development, for a purchase price of approximately $822,500, paid in cash; and
|
·
|
an approximately 3.8 acre parcel of vacant land in St. Cloud, Minnesota, acquired for possible future development for a purchase price of approximately $447,000, paid in cash.
|
·
|
a 308-unit multi-family residential property in Topeka, Kansas, on approximately 18.3 acres of land, for a purchase price of approximately $17.7 million, of which $5.2 million was paid in cash with assumed debt of $12.5 million;
|
·
|
a 232-unit multi-family residential property in Lincoln, Nebraska, on approximately 14.7 acres of land, for a purchase price of approximately $17.5 million, of which $14.2 million was paid in cash and the remainder in limited partnership units of the Operating Partnership valued at $3.3 million; and
|
·
|
a 208-unit multi-family residential property in Lincoln, Nebraska, on approximately 11.5 acres of land, for a purchase price of approximately $17.3 million, of which $13.8 million was paid in cash and the remainder in limited partnership units of the Operating Partnership valued at $3.5 million.
|
|
(in thousands)
|
||||||||||||||||
Acquisitions
|
Date Acquired
|
Land
|
Building
|
Intangible
Assets
|
Acquisition
Cost
|
||||||||||||
|
|
||||||||||||||||
Multi-Family Residential
|
|
||||||||||||||||
308 unit - Villa West - Topeka, KS
|
5/8/12
|
$
|
1,590
|
$
|
15,760
|
$
|
300
|
$
|
17,650
|
||||||||
232 unit - Colony - Lincoln, NE
|
6/4/12
|
1,515
|
15,731
|
254
|
17,500
|
||||||||||||
208 unit - Lakeside Village - Lincoln, NE
|
6/4/12
|
1,215
|
15,837
|
198
|
17,250
|
||||||||||||
58 unit - The Ponds at Heritage Place - Sartell, MN
|
10/10/12
|
395
|
4,564
|
61
|
5,020
|
||||||||||||
|
|
4,715
|
51,892
|
813
|
57,420
|
||||||||||||
|
|
||||||||||||||||
Unimproved Land
|
|
||||||||||||||||
University Commons - Williston, ND
|
8/1/12
|
823
|
0
|
0
|
823
|
||||||||||||
Cypress Court Unimproved - St. Cloud, MN
|
8/10/12
|
447
|
0
|
0
|
447
|
||||||||||||
Cypress Court Apartment Development - St. Cloud, MN(1)
|
8/10/12
|
1,136
|
0
|
0
|
1,136
|
||||||||||||
Badger Hills - Rochester, MN(2)
|
12/14/12
|
1,050
|
0
|
0
|
1,050
|
||||||||||||
Grand Forks Unimproved - Grand Forks, ND
|
12/31/12
|
4,278
|
0
|
0
|
4,278
|
||||||||||||
Minot Unimproved (Southgate Lot 4) - Minot, ND
|
1/11/13
|
1,882
|
0
|
0
|
1,882
|
||||||||||||
Commons at Southgate - Minot, ND(3)
|
1/22/13
|
3,691
|
0
|
0
|
3,691
|
||||||||||||
Landing at Southgate - Minot, ND(3)
|
1/22/13
|
2,262
|
0
|
0
|
2,262
|
||||||||||||
|
|
15,569
|
0
|
0
|
15,569
|
||||||||||||
|
|
||||||||||||||||
Total Property Acquisitions
|
|
$
|
20,284
|
$
|
51,892
|
$
|
813
|
$
|
72,989
|
(1)
|
Land is owned by a joint venture in which the Company has an approximately 79% interest.
|
(2)
|
Acquisition of unimproved land consisted of two parcels acquired separately on December 14 and December 20, 2012, respectively.
|
(3)
|
Land is owned by a joint venture entity in which the Company has an approximately 51% interest.
|
|
|
(in thousands)
|
|||||||||||||||
Development Projects Placed in Service
|
Date Placed in Service
|
Land
|
Building
|
Intangible
Assets
|
Acquisition
Cost
|
||||||||||||
|
|
||||||||||||||||
Multi-Family Residential
|
|
||||||||||||||||
159 unit - Quarry Ridge II - Rochester, MN(1)
|
6/29/12
|
$
|
0
|
$
|
4,591
|
$
|
0
|
$
|
4,591
|
||||||||
73 unit - Williston Garden Buildings 3 and 4 - Williston, ND(2)
|
7/31/12
|
0
|
7,058
|
0
|
7,058
|
||||||||||||
|
|
0
|
11,649
|
0
|
11,649
|
||||||||||||
Commercial Medical
|
|
||||||||||||||||
26,662 sq ft Spring Wind Expansion - Laramie, WY(3)
|
11/16/12
|
0
|
1,675
|
0
|
1,675
|
||||||||||||
45,222 sq ft Jamestown Medical Office Building - Jamestown, ND(4)
|
1/1/13
|
0
|
4,901
|
0
|
4,901
|
||||||||||||
|
|
0
|
6,576
|
0
|
6,576
|
||||||||||||
Commercial Industrial
|
|
||||||||||||||||
27,567 sq ft Minot IPS - Minot, ND(5)
|
12/17/12
|
0
|
3,953
|
0
|
3,953
|
||||||||||||
|
|
||||||||||||||||
Total Development Projects Placed in Service
|
|
$
|
0
|
$
|
22,178
|
$
|
0
|
$
|
22,178
|
(1)
|
Development property placed in service June 29, 2012. Additional costs paid in fiscal years 2012 and 2011, and land acquired in fiscal year 2007, totaled $13.0 million, for a total project cost at January 31, 2013 of $17.6 million.
|
(2)
|
Development property placed in service July 31, 2012. Buildings 1 and 2 were placed in service in fiscal year 2012. Additional costs paid in fiscal year 2012 totaled $12.0 million, for a total project cost at January 31, 2013 of $19.1 million.
|
(3)
|
Expansion project placed in service November 16, 2012. Additional costs paid in fiscal year 2012 totaled $1.8 million, for a total project cost at January 31, 2013 of $3.5 million.
|
(4)
|
Development property placed in service January 1, 2013. Additional costs paid in fiscal year 2012 totaled $1.0 million, for a total project cost at January 31, 2013 of $5.9 million.
|
(5)
|
Development property placed in service December 17, 2012. Additional costs paid in fiscal year 2012 totaled $1.8 million, for a total project cost at January 31, 2013 of $5.8 million.
|
|
(in thousands)
|
||||||||||||||||
Acquisitions
|
Date Acquired
|
Land
|
Building
|
Intangible
Assets
|
Acquisition
Cost
|
||||||||||||
|
|
||||||||||||||||
Multi-Family Residential
|
|
||||||||||||||||
147 unit - Regency Park Estates - St. Cloud, MN
|
8/1/11
|
$
|
702
|
$
|
10,198
|
$
|
0
|
$
|
10,900
|
||||||||
50 unit - Cottage West Twin Homes - Sioux Falls, SD
|
10/12/11
|
968
|
3,762
|
0
|
4,730
|
||||||||||||
24 unit - Gables Townhomes - Sioux Falls, SD
|
10/12/11
|
349
|
1,921
|
0
|
2,270
|
||||||||||||
36 unit - Evergreen II - Isanti, MN
|
11/1/11
|
701
|
2,774
|
0
|
3,475
|
||||||||||||
|
|
2,720
|
18,655
|
0
|
21,375
|
||||||||||||
|
|
||||||||||||||||
Commercial Medical
|
|
||||||||||||||||
17,273 sq ft Spring Creek American Falls - American Falls, ID
|
9/1/11
|
137
|
3,409
|
524
|
4,070
|
||||||||||||
15,571 sq ft Spring Creek Soda Springs - Soda Springs, ID
|
9/1/11
|
66
|
2,122
|
42
|
2,230
|
||||||||||||
15,559 sq ft Spring Creek Eagle - Eagle, ID
|
9/1/11
|
250
|
3,191
|
659
|
4,100
|
||||||||||||
31,820 sq ft Spring Creek Meridian - Meridian, ID
|
9/1/11
|
428
|
5,499
|
1,323
|
7,250
|
||||||||||||
26,605 sq ft Spring Creek Overland - Boise, ID
|
9/1/11
|
656
|
5,001
|
1,068
|
6,725
|
||||||||||||
16,311 sq ft Spring Creek Boise - Boise, ID
|
9/1/11
|
711
|
4,236
|
128
|
5,075
|
||||||||||||
26,605 sq ft Spring Creek Ustick - Meridian, ID
|
9/1/11
|
467
|
3,833
|
0
|
4,300
|
||||||||||||
Meadow Wind Land - Casper, WY
|
9/1/11
|
50
|
0
|
0
|
50
|
||||||||||||
3,431 sq ft Edina 6525 Drew Ave S - Edina, MN
|
10/13/11
|
388
|
117
|
0
|
505
|
||||||||||||
|
|
3,153
|
27,408
|
3,744
|
34,305
|
||||||||||||
|
|
||||||||||||||||
Unimproved Land
|
|
||||||||||||||||
Minot IPS - Minot, ND
|
9/7/11
|
416
|
0
|
0
|
416
|
||||||||||||
|
|
||||||||||||||||
|
|
||||||||||||||||
Total Property Acquisitions
|
|
$
|
6,289
|
$
|
46,063
|
$
|
3,744
|
$
|
56,096
|
|
|
(in thousands)
|
|||||||||||||||
Development Projects Placed in Service
|
Date Placed in Service
|
Land
|
Building
|
Intangible
Assets
|
Acquisition
Cost
|
||||||||||||
|
|
||||||||||||||||
Commercial Medical
|
|
||||||||||||||||
24,795 sq ft Trinity at Plaza 16 - Minot, ND(1)
|
9/23/11
|
$
|
0
|
$
|
5,562
|
$
|
0
|
$
|
5,562
|
||||||||
22,193 sq ft Meadow Winds Addition - Casper, WY(2)
|
12/30/11
|
0
|
3,840
|
0
|
3,840
|
||||||||||||
|
|
0
|
9,402
|
0
|
9,402
|
||||||||||||
|
|
||||||||||||||||
Commercial Retail
|
|
||||||||||||||||
19,037 sq ft Jamestown Buffalo Mall - Jamestown, ND(3)
|
6/15/11
|
0
|
822
|
0
|
822
|
||||||||||||
|
|
||||||||||||||||
Total Development Projects Placed in Service
|
|
$
|
0
|
$
|
10,224
|
$
|
0
|
$
|
10,224
|
(1)
|
Development property placed in service September 23, 2011. Additional costs paid in fiscal year 2011 totaled $3.3 million, for a total project cost at January 31, 2012 of $8.8 million.
|
(2)
|
Expansion project placed in service December 30, 2011.
|
(3)
|
Construction project placed in service June 15, 2011. Additional costs paid in fiscal year 2011 totaled $1.4 million, for a total project cost at January 31, 2012 of $2.3 million.
|
|
(in thousands)
|
|||||||
|
Nine Months Ended
January 31
|
|||||||
|
2013
|
2012
|
||||||
Total revenue
|
$
|
4,669
|
$
|
2,383
|
||||
Net (loss) income
|
$
|
(116
|
)
|
$
|
454
|
|
|
(in thousands)
|
|||||||||||
Dispositions
|
Date
Disposed
|
Sales Price
|
Book Value
and Sales Cost
|
Gain/(Loss)
|
|||||||||
|
|
||||||||||||
Multi-Family Residential
|
|
||||||||||||
116 unit - Terrace on the Green - Fargo, ND
|
9/27/12
|
$
|
3,450
|
$
|
1,248
|
$
|
2,202
|
||||||
85 unit - Prairiewood Meadows - Fargo, ND
|
9/27/12
|
3,450
|
2,846
|
604
|
|||||||||
66 unit - Candlelight - Fargo, ND
|
11/27/12
|
1,950
|
1,178
|
772
|
|||||||||
|
|
8,850
|
5,272
|
3,578
|
|||||||||
|
|
||||||||||||
Commercial Retail
|
|
||||||||||||
16,080 sq ft Kentwood Thomasville - Kentwood, MI
|
6/20/12
|
625
|
692
|
(67
|
)
|
||||||||
|
|
||||||||||||
Other
|
|
||||||||||||
Georgetown Square Condominiums 5 and 6
|
6/21/12
|
330
|
336
|
(6
|
)
|
||||||||
Georgetown Square Condominiums 3 and 4
|
8/2/12
|
368
|
421
|
(53
|
)
|
||||||||
|
|
698
|
757
|
(59
|
)
|
||||||||
|
|
||||||||||||
Total Property Dispositions
|
|
$
|
10,173
|
$
|
6,721
|
$
|
3,452
|
|
|
(in thousands)
|
|||||||||||
Dispositions
|
Date
Disposed
|
Sales Price
|
Book Value
and Sales Cost
|
Gain/(Loss)
|
|||||||||
|
|
||||||||||||
Commercial Retail
|
|
||||||||||||
41,200 sq ft Livingstone Pamida - Livingston, MT
|
8/1/11
|
$
|
2,175
|
$
|
1,586
|
$
|
589
|
||||||
|
|
||||||||||||
Total Property Dispositions
|
|
$
|
2,175
|
$
|
1,586
|
$
|
589
|
Year ended April 30,
|
(in thousands)
|
|||
2013 (remainder)
|
$
|
10,009
|
||
2014
|
64,524
|
|||
2015
|
112,886
|
|||
2016
|
92,221
|
|||
2017
|
197,947
|
|||
Thereafter
|
564,036
|
|||
Total payments
|
$
|
1,041,623
|
|
(in thousands)
|
|||||||||||||||
|
January 31, 2013
|
April 30, 2012
|
||||||||||||||
|
Carrying Amount
|
Fair Value
|
Carrying Amount
|
Fair Value
|
||||||||||||
FINANCIAL ASSETS
|
||||||||||||||||
Cash and cash equivalents
|
$
|
62,302
|
$
|
62,302
|
$
|
39,989
|
$
|
39,989
|
||||||||
Other investments
|
638
|
638
|
634
|
634
|
||||||||||||
FINANCIAL LIABILITIES
|
||||||||||||||||
Other debt
|
21,529
|
21,558
|
13,875
|
13,973
|
||||||||||||
Line of credit
|
10,000
|
10,000
|
39,000
|
39,000
|
||||||||||||
Mortgages payable
|
1,041,623
|
1,148,056
|
1,048,689
|
1,087,082
|
|
(in thousands)
|
|||
Balance at April 30, 2011
|
$
|
987
|
||
Net income
|
12
|
|||
Distributions
|
(27
|
)
|
||
Mark-to-market adjustments
|
35
|
|||
Acquisition of joint venture partner's interest
|
(1,007
|
)
|
||
Balance at January 31, 2012
|
$
|
0
|
·
|
a nine-building, 336-unit multi-family residential property in Omaha, Nebraska, on approximately 18.5 acres of land, for a purchase price of approximately $28.3 million, to be paid in cash;
|
·
|
a 71-unit multi-family residential property in Rapid City, South Dakota, on approximately 3.5 acres, for a purchase price totaling $6.2 million, of which approximately $2.8 million would be paid in cash, with the remainder paid in limited partnership units of the Operating Partnership valued at approximately $3.4 million;
|
·
|
an approximately 18.2 acre parcel of land in Bismarck, North Dakota, for a purchase price of $3.3 million, to be paid in cash; the purchase includes an existing approximately 16,844 square foot community center that is expected to be incorporated into the multi-family residential development project the Company currently plans for this parcel;
|
·
|
an approximately 10-acre parcel of vacant land in Grand Forks, North Dakota, for a purchase price of $1.6 million, to be paid in cash; and
|
·
|
an approximately 0.7 acre parcel of vacant land in Minot, North Dakota, adjacent to the Company's Chateau Apartments property, for a purchase price of approximately $172,000, to be paid in cash.
|
• | 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 $477.3 million; |
• | 66 commercial medical properties (including senior housing) containing approximately 3.0 million square feet of leasable space and having a total real estate investment amount net of accumulated depreciation of $424.0 million; |
• | 20 commercial industrial properties containing approximately 2.9 million square feet of leasable space and having a total real estate investment amount net of accumulated depreciation of $102.5 million; and |
• | 30 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 $104.5 million. |
|
(in thousands, except percentages)
|
|||||||||||||||
|
Three Months Ended January 31
|
|||||||||||||||
|
2013
|
2012
|
$ Change
|
% Change
|
||||||||||||
Real estate revenue
|
$
|
66,231
|
$
|
60,546
|
$
|
5,685
|
9.4
|
%
|
||||||||
NOI(1)
|
39,856
|
35,956
|
3,900
|
10.8
|
%
|
|||||||||||
Net income attributable to Investors Real Estate Trust
|
5,324
|
2,127
|
3,197
|
150.3
|
%
|
|||||||||||
FFO(2)
|
18,492
|
17,199
|
1,293
|
7.5
|
%
|
|
(in thousands, except percentages)
|
|||||||||||||||
|
Nine Months Ended January 31
|
|||||||||||||||
|
2013
|
2012
|
$ Change
|
% Change
|
||||||||||||
Real estate revenue
|
$
|
193,160
|
$
|
179,910
|
$
|
13,250
|
7.4
|
%
|
||||||||
NOI(1)
|
119,403
|
105,151
|
14,252
|
13.6
|
%
|
|||||||||||
Net income attributable to Investors Real Estate Trust
|
15,515
|
4,833
|
10,682
|
221.0
|
%
|
|||||||||||
FFO(2)
|
56,781
|
48,215
|
8,566
|
17.8
|
%
|
(1) | See Note 5 of the Notes to the Condensed Consolidated Financial Statements for reconciliations of NOI to net income. |
(2) | See pages 44-45 of the MD&A for the definition of FFO and reconciliations of FFO to net income. |
|
Stabilized Properties
|
|
All Properties
|
||
|
As of January 31,
|
|
As of January 31,
|
||
Segments
|
2013
|
2012
|
|
2013
|
2012
|
Multi-Family Residential
|
94.0%
|
93.9%
|
|
93.6%
|
93.2%
|
Commercial Office
|
78.4%
|
77.9%
|
|
78.4%
|
77.9%
|
Commercial Medical
|
94.6%
|
94.2%
|
|
94.9%
|
94.5%
|
Commercial Industrial
|
95.8%
|
94.5%
|
|
95.9%
|
94.5%
|
Commercial Retail
|
87.9%
|
87.5%
|
|
87.9%
|
87.5%
|
(1)
|
See page 30 of the MD&A for the definition of Stabilized Property.
|
·
|
The transfer to the New York Stock Exchange from the NASDAQ Global Select Market of the listing of the Company's common shares of beneficial interest and Series A preferred shares of beneficial interest, effective as of December 18, 2012;
|
·
|
The acquisition of two parcels of vacant land in Rochester, Minnesota, for possible future development, for purchase prices of $775,000 and $275,000, respectively;
|
·
|
The acquisition of a parcel of vacant land in Grand Forks, North Dakota, for possible future development, for a purchase price of approximately $4.3 million, of which approximately $2.3 million was paid in cash and the remainder in limited partnership units of the Operating Partnership valued at $2.0 million;
|
·
|
The acquisition of an approximately 51% interest in a joint venture entity currently constructing the Southgate Apartments project in Minot, North Dakota, which project is expected to be completed in two phases, with a total of approximately 341 units, for a currently-estimated total cost of $52.2 million;
|
·
|
The substantial completion of three development projects placed in service during the quarter: completion of an additional 29 assisted living units, and the conversion of an existing 16 units to memory care units, at the Company's Spring Wind senior housing facility in Laramie Wyoming; the completion of an approximately 45,000 square foot medical office building in Jamestown, North Dakota; and the completion of an approximately 28,000 square foot industrial building in Minot, North Dakota;
|
·
|
The acquisition of a parcel of vacant land in Minot, North Dakota, for possible future development, for a purchase price of approximately $1.9 million; and
|
·
|
The disposition of the Company's Candlelight Apartments property in Fargo, North Dakota, for a sale price of approximately $2.0 million and the assumption by the buyer of mortgage debt on the property in the amount of approximately $1.2 million.
|
·
|
The acquisition of a 36-unit multi-family residential property in Isanti, Minnesota and an adjoining 4.9 acre-parcel of vacant land, for a purchase price of approximately $3.5 million, of which $3.0 million was paid in cash and the remainder in limited partnership units of the Operating Partnership valued at $495,000; this property is located next to the Company's existing 36-unit Evergreen Apartments in Isanti; and
|
·
|
The substantial completion of construction of an additional approximately 28 assisted living units and 16 memory care units at the Company's existing Meadow Wind senior housing facility in Casper, Wyoming.
|
|
(in thousands)
|
|||||||
|
Increase in Total
Revenue
Three Months
ended January 31, 2013
|
Increase in Total
Revenue
Nine Months
ended January 31, 2013
|
||||||
Rent in Fiscal 2013 primarily from properties acquired in Fiscal 2013
|
$
|
2,432
|
$
|
6,096
|
||||
Rent in Fiscal 2013 primarily from properties acquired or placed in service in Fiscal 2012 in excess of that received in Fiscal 2012 from the same properties
|
1,859
|
6,864
|
||||||
Increase (decrease) in rent on stabilized properties due primarily to increased occupancy in the multi-family residential segment and increased tenant reimbursements in the commercial office segment(1)
|
1,375
|
(1,201
|
)
|
|||||
Decrease in straight line rent
|
(479
|
)
|
(837
|
)
|
||||
Decrease in tenant concessions
|
498
|
2,328
|
||||||
Net increase in total revenue
|
$
|
5,685
|
$
|
13,250
|
(1)
|
See analysis of NOI by segment on pages 32-42 of the MD&A for additional information.
|
|
Increase in Net Income
|
|||||||
|
(in thousands)
|
|||||||
|
Three Months
ended January 31, 2013
|
Nine Months
ended January 31, 2013
|
||||||
Net income available to common shareholders for Fiscal 2012
|
$
|
1,534
|
$
|
3,054
|
||||
Increase in NOI due primarily to acquisitions and gain on involuntary conversion
|
3,900
|
14,252
|
||||||
Increase in depreciation/amortization due to depreciation of tenant and capital improvements
|
(1,117
|
)
|
(4,163
|
)
|
||||
Increase in administrative, advisory and trustee fees
|
(586
|
)
|
(458
|
)
|
||||
(Increase) decrease in other expenses
|
(105
|
)
|
13
|
|||||
Decrease (increase) in interest expense
|
686
|
(59
|
)
|
|||||
Decrease in interest and other income
|
(24
|
)
|
(45
|
)
|
||||
Increase in income from discontinued operations
|
878
|
3,034
|
||||||
Increase in net income attributable to noncontrolling interests – Operating Partnership
|
(205
|
)
|
(1,374
|
)
|
||||
Increase in net income attributable to noncontrolling interests – consolidated real estate entities
|
(230
|
)
|
(518
|
)
|
||||
Increase in dividends to preferred shareholders
|
(2,286
|
)
|
(4,571
|
)
|
||||
Net income available to common shareholders for Fiscal 2013
|
$
|
2,445
|
$
|
9,165
|
• | Interest Expense. Our mortgage interest expense decreased approximately $78,000, or 0.5%, to $15.2 million during the third quarter of fiscal year 2013, compared to $15.3 million in the third quarter of fiscal year 2012. Mortgage interest expense increased approximately $901,000, or 2.0%, to $46.0 million during the nine months ended January 31, 2013, compared to $45.1 million in same period of the prior fiscal year. Mortgage interest expense for properties newly acquired in fiscal years 2013 and 2012 added approximately $918,000 and $2.9 million to our total mortgage interest expense in the three and nine months ended January 31, 2013, while mortgage interest expense on existing properties decreased $996,000 and $2.0 million for the three and nine months ended January 31, 2013, respectively, compared to the same periods of fiscal year 2012. The decrease in mortgage interest expense is due to loan payoffs and refinancings in our stabilized properties portfolio. The mortgage interest expense category does not include interest expense on our line of credit, which totaled approximately $132,000 and $838,000 in the three and nine months ended January 31, 2013, and $775,000 and $1.8 million in the same periods of the prior fiscal year. Mortgage interest expense and interest expense on our line of credit are all components of "Interest expense" on our Condensed Consolidated Statements of Operations. Our overall weighted average interest rate on all outstanding mortgage debt (excluding borrowings under our secured line of credit and construction loans) was 5.65% as of January 31, 2013 and 5.78% as of April 31, 2012. Our mortgage debt on January 31, 2013 decreased approximately $7.1 million, or 0.7% from April 30, 2012. Mortgage debt does not include our multi-bank line of credit or our construction loans which appear on our Condensed Consolidated Balance Sheets in "Revolving line of credit" and "Other," respectively. |
(in thousands, except percentages)
|
||||||||||||||||
|
Three Months Ended January 31
|
|||||||||||||||
|
2013
|
2012
|
$ Change
|
% Change
|
||||||||||||
All Segments
|
||||||||||||||||
|
||||||||||||||||
Real estate revenue
|
||||||||||||||||
Stabilized
|
$
|
60,085
|
$
|
58,810
|
$
|
1,275
|
2.2
|
%
|
||||||||
Non-stabilized(1)
|
6,146
|
1,736
|
4,410
|
254.0
|
%
|
|||||||||||
Total
|
$
|
66,231
|
$
|
60,546
|
$
|
5,685
|
9.4
|
%
|
||||||||
|
||||||||||||||||
Real estate expenses
|
||||||||||||||||
Stabilized
|
$
|
24,488
|
$
|
24,192
|
$
|
296
|
1.2
|
%
|
||||||||
Non-stabilized(1)
|
1,887
|
398
|
1,489
|
374.1
|
%
|
|||||||||||
Total
|
$
|
26,375
|
$
|
24,590
|
$
|
1,785
|
7.3
|
%
|
||||||||
|
||||||||||||||||
Net operating income
|
||||||||||||||||
Stabilized
|
$
|
35,597
|
$
|
34,618
|
$
|
979
|
2.8
|
%
|
||||||||
Non-stabilized(1)
|
4,259
|
1,338
|
2,921
|
218.3
|
%
|
|||||||||||
Total
|
$
|
39,856
|
$
|
35,956
|
$
|
3,900
|
10.8
|
%
|
||||||||
Depreciation/amortization
|
(16,300
|
)
|
(15,183
|
)
|
||||||||||||
Administrative, advisory and trustee services
|
(2,245
|
)
|
(1,659
|
)
|
||||||||||||
Other expenses
|
(464
|
)
|
(359
|
)
|
||||||||||||
Interest expense
|
(15,725
|
)
|
(16,411
|
)
|
||||||||||||
Interest and other income
|
255
|
279
|
||||||||||||||
Income from continuing operations
|
5,377
|
2,623
|
||||||||||||||
Income (loss) from discontinued operations(2)
|
776
|
(102
|
)
|
|||||||||||||
Net income
|
$
|
6,153
|
$
|
2,521
|
(1)
|
Non-stabilized properties include:
|
|
FY2013 -
|
Multi-Family Residential -
|
Ashland, Grand Forks, ND; Chateau, Minot, ND; Colony, Lincoln, NE; Cottage West Twin Homes, Sioux Falls, SD; Evergreen II, Isanti, MN; Gables Townhomes, Sioux Falls, SD; Grand Gateway, St Cloud, MN; Lakeside Village, Lincoln, NE; Quarry Ridge II, Rochester, MN; Regency Park Estates, St Cloud, MN; The Ponds at Heritage Place, Sartell, MN; Villa West, Topeka, KS and Williston Garden, Williston, ND.
Total number of units, 1,597.
|
|
Commercial Medical -
|
Edina 6525 Drew Avenue, Edina, MN; Jamestown Medical Office Building, Jamestown, ND; Spring Creek American Falls, American Falls, ID; Spring Creek Soda Springs, Soda Springs, ID; Spring Creek Eagle, Eagle, ID; Spring Creek Meridian, Meridian, ID; Spring Creek Overland, Boise, ID; Spring Creek Boise, Boise, ID; Spring Creek Ustick, Meridian, ID and Trinity at Plaza 16, Minot, ND.
Total rentable square footage, 223,192.
|
|
Commercial Industrial -
|
Minot IPS, Minot, ND.
Total rentable square footage, 27,567.
|
FY2012 -
|
Multi-Family Residential -
|
Chateau, Minot, ND; Cottage West Twin Homes, Sioux Falls, SD; Evergreen II, Isanti, MN; Gables Townhomes, Sioux Falls, SD; Regency Park Estates, St Cloud, MN.
Total number of units, 321.
|
|
Commercial Medical -
|
Edina 6525 Drew Avenue, Edina, MN; Spring Creek American Falls, American Falls, ID; Spring Creek Soda Springs, Soda Springs, ID; Spring Creek Eagle, Eagle, ID; Spring Creek Meridian, Meridian, ID; Spring Creek Overland, Boise, ID; Spring Creek Boise, Boise, ID; Spring Creek Ustick, Meridian, ID and Trinity at Plaza 16, Minot, ND.
Total rentable square footage, 177,970.
|
(2)
|
Discontinued operations include gain on disposals and income from operations for:
|
|
|
2013 Dispositions and Properties Held for Sale – Candlelight, Georgetown Square Condominiums, Kentwood Thomasville Furniture, Prairiewood Meadows and Terrace on the Green.
|
|
|
2012 Dispositions and Properties Held for Sale – Livingston Pamida, East Grand Station, Georgetown Square Condominiums and Kentwood Thomasville Furniture.
|
|
(in thousands, except percentages)
|
|||||||||||||||
|
Three Months Ended January 31,
|
|||||||||||||||
|
2013
|
2012
|
$ Change
|
% Change
|
||||||||||||
Multi-Family Residential
|
||||||||||||||||
|
||||||||||||||||
Real estate revenue
|
||||||||||||||||
Stabilized
|
$
|
18,254
|
$
|
17,620
|
$
|
634
|
3.6
|
%
|
||||||||
Non-stabilized
|
4,813
|
780
|
4,033
|
517.1
|
%
|
|||||||||||
Total
|
$
|
23,067
|
$
|
18,400
|
$
|
4,667
|
25.4
|
%
|
||||||||
|
||||||||||||||||
Real estate expenses
|
||||||||||||||||
Stabilized
|
$
|
8,696
|
$
|
8,136
|
$
|
560
|
6.9
|
%
|
||||||||
Non-stabilized
|
1,648
|
316
|
1,332
|
421.5
|
%
|
|||||||||||
Total
|
$
|
10,344
|
$
|
8,452
|
$
|
1,892
|
22.4
|
%
|
||||||||
|
||||||||||||||||
Net operating income
|
||||||||||||||||
Stabilized
|
$
|
9,558
|
$
|
9,484
|
$
|
74
|
0.8
|
%
|
||||||||
Non-stabilized
|
3,165
|
464
|
2,701
|
582.1
|
%
|
|||||||||||
Total
|
$
|
12,723
|
$
|
9,948
|
$
|
2,775
|
27.9
|
%
|
Occupancy
|
2013
|
2012
|
|
Stabilized
|
94.0%
|
93.9%
|
|
Non-stabilized
|
91.4%
|
74.5%
|
|
Total
|
93.6%
|
93.2%
|
|
Number of Units
|
2013
|
2012
|
|
Stabilized
|
8,327
|
8,333
|
|
Non-stabilized
|
1,597
|
321
|
|
Total
|
9,924
|
8,654
|
|
|
(in thousands, except percentages)
|
|||||||||||||||
|
Three Months Ended January 31,
|
|||||||||||||||
|
2013
|
2012
|
$ Change
|
% Change
|
||||||||||||
Commercial Office
|
||||||||||||||||
|
||||||||||||||||
Real estate revenue
|
||||||||||||||||
Stabilized
|
$
|
19,338
|
$
|
18,541
|
$
|
797
|
4.3
|
%
|
||||||||
Non-stabilized
|
0
|
0
|
0
|
0.0
|
%
|
|||||||||||
Total
|
$
|
19,338
|
$
|
18,541
|
$
|
797
|
4.3
|
%
|
||||||||
|
||||||||||||||||
Real estate expenses
|
||||||||||||||||
Stabilized
|
$
|
9,399
|
$
|
8,694
|
$
|
705
|
8.1
|
%
|
||||||||
Non-stabilized
|
0
|
0
|
0
|
0.0
|
%
|
|||||||||||
Total
|
$
|
9,399
|
$
|
8,694
|
$
|
705
|
8.1
|
%
|
||||||||
|
||||||||||||||||
Net operating income
|
||||||||||||||||
Stabilized
|
$
|
9,939
|
$
|
9,847
|
$
|
92
|
0.9
|
%
|
||||||||
Non-stabilized
|
0
|
0
|
0
|
0.0
|
%
|
|||||||||||
Total
|
$
|
9,939
|
$
|
9,847
|
$
|
92
|
0.9
|
%
|
Occupancy
|
2013
|
2012
|
|
Stabilized
|
78.4%
|
77.9%
|
|
Non-stabilized
|
n/a
|
n/a
|
|
Total
|
78.4%
|
77.9%
|
|
Rentable Square Footage
|
2013
|
2012
|
|
Stabilized
|
5,062,048
|
5,061,212
|
|
Non-stabilized
|
0
|
0
|
|
Total
|
5,062,048
|
5,061,212
|
|
|
(in thousands, except percentages)
|
|||||||||||||||
|
Three Months Ended January 31,
|
|||||||||||||||
|
2013
|
2012
|
$ Change
|
% Change
|
||||||||||||
Commercial Medical
|
||||||||||||||||
|
||||||||||||||||
Real estate revenue
|
||||||||||||||||
Stabilized
|
$
|
14,927
|
$
|
15,654
|
$
|
(727
|
)
|
(4.6
|
)%
|
|||||||
Non-stabilized
|
1,280
|
956
|
324
|
33.9
|
%
|
|||||||||||
Total
|
$
|
16,207
|
$
|
16,610
|
$
|
(403
|
)
|
(2.4
|
)%
|
|||||||
|
||||||||||||||||
Real estate expenses
|
||||||||||||||||
Stabilized
|
$
|
3,890
|
$
|
5,138
|
$
|
(1,248
|
)
|
(24.3
|
)%
|
|||||||
Non-stabilized
|
239
|
82
|
157
|
191.5
|
%
|
|||||||||||
Total
|
$
|
4,129
|
$
|
5,220
|
$
|
(1,091
|
)
|
(20.9
|
)%
|
|||||||
|
||||||||||||||||
Net operating income
|
||||||||||||||||
Stabilized
|
$
|
11,037
|
$
|
10,516
|
$
|
521
|
5.0
|
%
|
||||||||
Non-stabilized
|
1,041
|
874
|
167
|
19.1
|
%
|
|||||||||||
Total
|
$
|
12,078
|
$
|
11,390
|
$
|
688
|
6.0
|
%
|
Occupancy
|
2013
|
2012
|
|
Stabilized
|
94.6%
|
94.2%
|
|
Non-stabilized
|
98.2%
|
99.2%
|
|
Total
|
94.9%
|
94.5%
|
|
Rentable Square Footage
|
2013
|
2012
|
|
Stabilized
|
2,780,780
|
2,749,718
|
|
Non-stabilized
|
223,192
|
177,970
|
|
Total
|
3,003,972
|
2,927,688
|
|
|
(in thousands, except percentages)
|
|||||||||||||||
|
Three Months Ended January 31,
|
|||||||||||||||
|
2013
|
2012
|
$ Change
|
% Change
|
||||||||||||
Commercial Industrial
|
||||||||||||||||
|
||||||||||||||||
Real estate revenue
|
||||||||||||||||
Stabilized
|
$
|
3,800
|
$
|
3,596
|
$
|
204
|
5.7
|
%
|
||||||||
Non-stabilized
|
53
|
0
|
53
|
n/
|
a
|
|||||||||||
Total
|
$
|
3,853
|
$
|
3,596
|
$
|
257
|
7.1
|
%
|
||||||||
|
||||||||||||||||
Real estate expenses
|
||||||||||||||||
Stabilized
|
$
|
1,095
|
$
|
1,078
|
$
|
17
|
1.6
|
%
|
||||||||
Non-stabilized
|
0
|
0
|
0
|
0.0
|
%
|
|||||||||||
Total
|
$
|
1,095
|
$
|
1,078
|
$
|
17
|
1.6
|
%
|
||||||||
|
||||||||||||||||
Net operating income
|
||||||||||||||||
Stabilized
|
$
|
2,705
|
$
|
2,518
|
$
|
187
|
7.4
|
%
|
||||||||
Non-stabilized
|
53
|
0
|
53
|
n/
|
a
|
|||||||||||
Total
|
$
|
2,758
|
$
|
2,518
|
$
|
240
|
9.5
|
%
|
Occupancy
|
2013
|
2012
|
|
Stabilized
|
95.8%
|
94.5%
|
|
Non-stabilized
|
100%
|
n/a
|
|
Total
|
95.9%
|
94.5%
|
|
Rentable Square Footage
|
2013
|
2012
|
|
Stabilized
|
2,935,764
|
2,943,968
|
|
Non-stabilized
|
27,567
|
0
|
|
Total
|
2,963,331
|
2,943,968
|
|
|
(in thousands, except percentages)
|
|||||||||||||||
|
Three Months Ended January 31,
|
|||||||||||||||
|
2013
|
2012
|
$ Change
|
% Change
|
||||||||||||
Commercial Retail
|
||||||||||||||||
|
||||||||||||||||
Real estate revenue
|
||||||||||||||||
Stabilized
|
$
|
3,766
|
$
|
3,399
|
$
|
367
|
10.8
|
%
|
||||||||
Non-stabilized
|
0
|
0
|
0
|
0.0
|
%
|
|||||||||||
Total
|
$
|
3,766
|
$
|
3,399
|
$
|
367
|
10.8
|
%
|
||||||||
|
||||||||||||||||
Real estate expenses
|
||||||||||||||||
Stabilized
|
$
|
1,408
|
$
|
1,146
|
$
|
262
|
22.9
|
%
|
||||||||
Non-stabilized
|
0
|
0
|
0
|
0.0
|
%
|
|||||||||||
Total
|
$
|
1,408
|
$
|
1,146
|
$
|
262
|
22.9
|
%
|
||||||||
|
||||||||||||||||
Net operating income
|
||||||||||||||||
Stabilized
|
$
|
2,358
|
$
|
2,253
|
$
|
105
|
4.7
|
%
|
||||||||
Non-stabilized
|
0
|
0
|
0
|
0.0
|
%
|
|||||||||||
Total
|
$
|
2,358
|
$
|
2,253
|
$
|
105
|
4.7
|
%
|
Occupancy
|
2013
|
2012
|
|
Stabilized
|
87.9%
|
87.5%
|
|
Non-stabilized
|
n/a
|
n/a
|
|
Total
|
87.9%
|
87.5%
|
|
Rentable Square Footage
|
2013
|
2012
|
|
Stabilized
|
1,395,632
|
1,392,133
|
|
Non-stabilized
|
0
|
0
|
|
Total
|
1,395,632
|
1,392,133
|
|
(in thousands, except percentages)
|
||||||||||||||||
|
Nine Months Ended January 31
|
|||||||||||||||
|
2013
|
2012
|
$ Change
|
% Change
|
||||||||||||
All Segments
|
||||||||||||||||
|
||||||||||||||||
Real estate revenue
|
||||||||||||||||
Stabilized
|
$
|
176,903
|
$
|
177,146
|
$
|
(243
|
)
|
(0.1
|
)%
|
|||||||
Non-stabilized(1)
|
16,257
|
2,764
|
13,493
|
488.2
|
%
|
|||||||||||
Total
|
$
|
193,160
|
$
|
179,910
|
$
|
13,250
|
7.4
|
%
|
||||||||
|
||||||||||||||||
Real estate expenses
|
||||||||||||||||
Stabilized
|
$
|
71,159
|
$
|
73,994
|
$
|
(2,835
|
)
|
(3.8
|
)%
|
|||||||
Non-stabilized(1)
|
4,861
|
765
|
4,096
|
535.4
|
%
|
|||||||||||
Total
|
$
|
76,020
|
$
|
74,759
|
$
|
1,261
|
1.7
|
%
|
||||||||
|
||||||||||||||||
Gain on involuntary conversion
|
||||||||||||||||
Stabilized
|
$
|
0
|
$
|
0
|
$
|
0
|
0.0
|
%
|
||||||||
Non-stabilized(1)
|
2,263
|
0
|
2,263
|
n/
|
a
|
|||||||||||
Total
|
$
|
2,263
|
$
|
0
|
$
|
2,263
|
n/
|
a
|
||||||||
|
||||||||||||||||
Net operating income
|
||||||||||||||||
Stabilized
|
$
|
105,744
|
$
|
103,152
|
$
|
2,592
|
2.5
|
%
|
||||||||
Non-stabilized(1)
|
13,659
|
1,999
|
11,660
|
583.3
|
%
|
|||||||||||
Total
|
$
|
119,403
|
$
|
105,151
|
$
|
14,252
|
13.6
|
%
|
||||||||
Depreciation/amortization
|
(49,028
|
)
|
(44,865
|
)
|
||||||||||||
Administrative, advisory and trustee services
|
(6,402
|
)
|
(5,944
|
)
|
||||||||||||
Other expenses
|
(1,496
|
)
|
(1,509
|
)
|
||||||||||||
Interest expense
|
(48,448
|
)
|
(48,389
|
)
|
||||||||||||
Interest and other income
|
600
|
645
|
||||||||||||||
Income from continuing operations
|
14,629
|
5,089
|
||||||||||||||
Income from discontinued operations(2)
|
3,530
|
496
|
||||||||||||||
Net income
|
$
|
18,159
|
$
|
5,585
|
(1)
|
See list of non-stabilized properties on page 31 of the MD&A.
|
(2)
|
See list of discontinued operations on page 31 of the MD&A.
|
|
(in thousands, except percentages)
|
|||||||||||||||
|
Nine Months Ended January 31,
|
|||||||||||||||
|
2013
|
2012
|
$ Change
|
% Change
|
||||||||||||
Multi-Family Residential
|
||||||||||||||||
|
||||||||||||||||
Real estate revenue
|
||||||||||||||||
Stabilized
|
$
|
54,480
|
$
|
52,147
|
$
|
2,333
|
4.5
|
%
|
||||||||
Non-stabilized
|
12,901
|
1,294
|
11,607
|
897.0
|
%
|
|||||||||||
Total
|
$
|
67,381
|
$
|
53,441
|
$
|
13,940
|
26.1
|
%
|
||||||||
|
||||||||||||||||
Real estate expenses
|
||||||||||||||||
Stabilized
|
$
|
24,275
|
$
|
24,530
|
$
|
(255
|
)
|
(1.0
|
)%
|
|||||||
Non-stabilized
|
4,371
|
594
|
3,777
|
635.9
|
%
|
|||||||||||
Total
|
$
|
28,646
|
$
|
25,124
|
$
|
3,522
|
14.0
|
%
|
||||||||
|
||||||||||||||||
Gain on involuntary conversion
|
||||||||||||||||
Stabilized
|
$
|
0
|
$
|
0
|
$
|
0
|
0.0
|
%
|
||||||||
Non-stabilized
|
2,263
|
0
|
2,263
|
n/
|
a
|
|||||||||||
Total
|
$
|
2,263
|
$
|
0
|
$
|
2,263
|
n/
|
a
|
||||||||
|
||||||||||||||||
Net operating income
|
||||||||||||||||
Stabilized
|
$
|
30,205
|
$
|
27,617
|
$
|
2,588
|
9.4
|
%
|
||||||||
Non-stabilized
|
10,793
|
700
|
10,093
|
1441.9
|
%
|
|||||||||||
Total
|
$
|
40,998
|
$
|
28,317
|
$
|
12,681
|
44.8
|
%
|
Occupancy
|
2013
|
2012
|
|
Stabilized
|
94.0%
|
93.9%
|
|
Non-stabilized
|
91.4%
|
74.5%
|
|
Total
|
93.6%
|
93.2%
|
|
Number of Units
|
2013
|
2012
|
|
Stabilized
|
8,327
|
8,333
|
|
Non-stabilized
|
1,597
|
321
|
|
Total
|
9,924
|
8,654
|
|
|
(in thousands, except percentages)
|
|||||||||||||||
|
Nine Months Ended January 31,
|
|||||||||||||||
|
2013
|
2012
|
$ Change
|
% Change
|
||||||||||||
Commercial Office
|
||||||||||||||||
|
||||||||||||||||
Real estate revenue
|
||||||||||||||||
Stabilized
|
$
|
57,105
|
$
|
55,723
|
$
|
1,382
|
2.5
|
%
|
||||||||
Non-stabilized
|
0
|
0
|
0
|
0.0
|
%
|
|||||||||||
Total
|
$
|
57,105
|
$
|
55,723
|
$
|
1,382
|
2.5
|
%
|
||||||||
|
||||||||||||||||
Real estate expenses
|
||||||||||||||||
Stabilized
|
$
|
28,081
|
$
|
26,451
|
$
|
1,630
|
6.2
|
%
|
||||||||
Non-stabilized
|
0
|
0
|
0
|
0.0
|
%
|
|||||||||||
Total
|
$
|
28,081
|
$
|
26,451
|
$
|
1,630
|
6.2
|
%
|
||||||||
|
||||||||||||||||
Net operating income
|
||||||||||||||||
Stabilized
|
$
|
29,024
|
$
|
29,272
|
$
|
(248
|
)
|
(0.8
|
)%
|
|||||||
Non-stabilized
|
0
|
0
|
0
|
0.0
|
%
|
|||||||||||
Total
|
$
|
29,024
|
$
|
29,272
|
$
|
(248
|
)
|
(0.8
|
)%
|
Occupancy
|
2013
|
2012
|
|
Stabilized
|
78.4%
|
77.9%
|
|
Non-stabilized
|
n/a
|
n/a
|
|
Total
|
78.4%
|
77.9%
|
|
Rentable Square Footage
|
2013
|
2012
|
|
Stabilized
|
5,062,048
|
5,061,212
|
|
Non-stabilized
|
0
|
0
|
|
Total
|
5,062,048
|
5,061,212
|
|
|
(in thousands, except percentages)
|
|||||||||||||||
|
Nine Months Ended January 31,
|
|||||||||||||||
|
2013
|
2012
|
$ Change
|
% Change
|
||||||||||||
Commercial Medical
|
||||||||||||||||
|
||||||||||||||||
Real estate revenue
|
||||||||||||||||
Stabilized
|
$
|
43,748
|
$
|
48,829
|
$
|
(5,081
|
)
|
(10.4
|
)%
|
|||||||
Non-stabilized
|
3,303
|
1,470
|
1,833
|
124.7
|
%
|
|||||||||||
Total
|
$
|
47,051
|
$
|
50,299
|
$
|
(3,248
|
)
|
(6.5
|
)%
|
|||||||
|
||||||||||||||||
Real estate expenses
|
||||||||||||||||
Stabilized
|
$
|
11,905
|
$
|
16,538
|
$
|
(4,633
|
)
|
(28.0
|
)%
|
|||||||
Non-stabilized
|
490
|
171
|
319
|
186.6
|
%
|
|||||||||||
Total
|
$
|
12,395
|
$
|
16,709
|
$
|
(4,314
|
)
|
(25.8
|
)%
|
|||||||
|
||||||||||||||||
Net operating income
|
||||||||||||||||
Stabilized
|
$
|
31,843
|
$
|
32,291
|
$
|
(448
|
)
|
(1.4
|
)%
|
|||||||
Non-stabilized
|
2,813
|
1,299
|
1,514
|
116.6
|
%
|
|||||||||||
Total
|
$
|
34,656
|
$
|
33,590
|
$
|
1,066
|
3.2
|
%
|
Occupancy
|
2013
|
2012
|
|
Stabilized
|
94.6%
|
94.2%
|
|
Non-stabilized
|
98.2%
|
99.2%
|
|
Total
|
94.9%
|
94.5%
|
|
Rentable Square Footage
|
2013
|
2012
|
|
Stabilized
|
2,780,780
|
2,749,718
|
|
Non-stabilized
|
223,192
|
177,970
|
|
Total
|
3,003,972
|
2,927,688
|
|
|
(in thousands, except percentages)
|
|||||||||||||||
|
Nine Months Ended January 31,
|
|||||||||||||||
|
2013
|
2012
|
$ Change
|
% Change
|
||||||||||||
Commercial Industrial
|
||||||||||||||||
|
||||||||||||||||
Real estate revenue
|
||||||||||||||||
Stabilized
|
$
|
10,837
|
$
|
10,597
|
$
|
240
|
2.3
|
%
|
||||||||
Non-stabilized
|
53
|
0
|
53
|
n/
|
a
|
|||||||||||
Total
|
$
|
10,890
|
$
|
10,597
|
$
|
293
|
2.8
|
%
|
||||||||
|
||||||||||||||||
Real estate expenses
|
||||||||||||||||
Stabilized
|
$
|
3,050
|
$
|
3,178
|
$
|
(128
|
)
|
(4.0
|
)%
|
|||||||
Non-stabilized
|
0
|
0
|
0
|
0.0
|
%
|
|||||||||||
Total
|
$
|
3,050
|
$
|
3,178
|
$
|
(128
|
)
|
(4.0
|
)%
|
|||||||
|
||||||||||||||||
Net operating income
|
||||||||||||||||
Stabilized
|
$
|
7,787
|
$
|
7,419
|
$
|
368
|
5.0
|
%
|
||||||||
Non-stabilized
|
53
|
0
|
53
|
n/
|
a
|
|||||||||||
Total
|
$
|
7,840
|
$
|
7,419
|
$
|
421
|
5.7
|
%
|
Occupancy
|
2013
|
2012
|
|
Stabilized
|
95.8%
|
94.5%
|
|
Non-stabilized
|
100%
|
n/a
|
|
Total
|
95.9%
|
94.5%
|
|
Rentable Square Footage
|
2013
|
2012
|
|
Stabilized
|
2,935,764
|
2,943,968
|
|
Non-stabilized
|
27,567
|
0
|
|
Total
|
2,963,331
|
2,943,968
|
|
|
(in thousands, except percentages)
|
|||||||||||||||
|
Nine Months Ended January 31,
|
|||||||||||||||
|
2013
|
2012
|
$ Change
|
% Change
|
||||||||||||
Commercial Retail
|
||||||||||||||||
|
||||||||||||||||
Real estate revenue
|
||||||||||||||||
Stabilized
|
$
|
10,733
|
$
|
9,850
|
$
|
883
|
9.0
|
%
|
||||||||
Non-stabilized
|
0
|
0
|
0
|
0.0
|
%
|
|||||||||||
Total
|
$
|
10,733
|
$
|
9,850
|
$
|
883
|
9.0
|
%
|
||||||||
|
||||||||||||||||
Real estate expenses
|
||||||||||||||||
Stabilized
|
$
|
3,848
|
$
|
3,297
|
$
|
551
|
16.7
|
%
|
||||||||
Non-stabilized
|
0
|
0
|
0
|
0.0
|
%
|
|||||||||||
Total
|
$
|
3,848
|
$
|
3,297
|
$
|
551
|
16.7
|
%
|
||||||||
|
||||||||||||||||
Net operating income
|
||||||||||||||||
Stabilized
|
$
|
6,885
|
$
|
6,553
|
$
|
332
|
5.1
|
%
|
||||||||
Non-stabilized
|
0
|
0
|
0
|
0.0
|
%
|
|||||||||||
Total
|
$
|
6,885
|
$
|
6,553
|
$
|
332
|
5.1
|
%
|
Occupancy
|
2013
|
2012
|
|
Stabilized
|
87.9%
|
87.5%
|
|
Non-stabilized
|
n/a
|
n/a
|
|
Total
|
87.9%
|
87.5%
|
|
Rentable Square Footage
|
2013
|
2012
|
|
Stabilized
|
1,395,632
|
1,392,133
|
|
Non-stabilized
|
0
|
0
|
|
Total
|
1,395,632
|
1,392,133
|
|
Lessee
|
% of Total Commercial
Segments' Minimum Rents
as of January 1, 2013
|
Affiliates of Edgewood Vista
|
13.1%
|
St. Luke's Hospital of Duluth, Inc.
|
3.4%
|
Fairview Health Services
|
3.3%
|
Applied Underwriters
|
2.2%
|
HealthEast Care System
|
1.6%
|
Affiliates of Siemens USA (NYSE: SI)
|
1.3%
|
Nebraska Orthopaedic Hospital
|
1.3%
|
Arcadis Corporate Services, Inc.
|
1.2%
|
Microsoft (NASDAQ: MSFT)
|
1.2%
|
State of Idaho Department of Health and Welfare
|
1.1%
|
All Others
|
70.3%
|
Total Monthly Commercial Rent as of January 1, 2013
|
100.0%
|
·
|
two parcels of vacant land in Rochester, Minnesota, acquired for possible future development, of approximately 20.1 acres and 3.8 acres, respectively, for purchase prices of $775,000 and $275,000, paid in cash;
|
·
|
an approximately 48.4 acre parcel of vacant land in Grand Forks, North Dakota, acquired for possible future development, for a purchase price of approximately $4.3 million, of which approximately $2.3 million was paid in cash and the remainder in limited partnership units of the Operating Partnership valued at $2.0 million;
|
·
|
an approximately 51% interest in a joint venture entity currently constructing the Southgate Apartments project in Minot, North Dakota, which project is expected to be completed in two phases, with a total of approximately 341 units, for a currently-estimated total cost of $52.2 million; and
|
·
|
a parcel of vacant land in Minot, North Dakota, acquired for possible future development for a purchase price of approximately $1.9 million; the approximately 2.2 acre parcel is adjacent to the Southgate multi-family residential project currently under development.
|
(in thousands, except per share amounts)
|
||||||||||||||||||||||||
Three Months Ended January 31,
|
2013
|
2012
|
||||||||||||||||||||||
|
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
|
$
|
5,324
|
$
|
2,127
|
||||||||||||||||||||
Less dividends to preferred shareholders
|
(2,879
|
)
|
(593
|
)
|
||||||||||||||||||||
Net income available to common shareholders
|
2,445
|
93,794
|
$
|
0.03
|
1,534
|
84,339
|
$
|
0.02
|
||||||||||||||||
Adjustments:
|
||||||||||||||||||||||||
Noncontrolling interest – Operating Partnership
|
556
|
21,413
|
351
|
19,596
|
||||||||||||||||||||
Depreciation and amortization(1)
|
16,263
|
15,179
|
||||||||||||||||||||||
Impairment of real estate investments
|
0
|
135
|
||||||||||||||||||||||
Gain on depreciable property sales
|
(772
|
)
|
0
|
|||||||||||||||||||||
Funds from operations applicable to common shares
and Units |
$
|
18,492
|
115,207
|
$
|
0.16
|
$
|
17,199
|
103,935
|
$
|
0.16
|
(in thousands, except per share amounts)
|
||||||||||||||||||||||||
Nine Months Ended January 31,
|
2013
|
2012
|
||||||||||||||||||||||
|
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
|
$
|
15,515
|
$
|
4,833
|
||||||||||||||||||||
Less dividends to preferred shareholders
|
(6,350
|
)
|
(1,779
|
)
|
||||||||||||||||||||
Net income available to common shareholders
|
9,165
|
92,260
|
$
|
0.10
|
3,054
|
82,424
|
$
|
0.04
|
||||||||||||||||
Adjustments:
|
||||||||||||||||||||||||
Noncontrolling interest – Operating Partnership
|
2,097
|
21,098
|
723
|
19,752
|
||||||||||||||||||||
Depreciation and amortization(4)
|
48,971
|
44,892
|
||||||||||||||||||||||
Impairment of real estate investments
|
0
|
135
|
||||||||||||||||||||||
Gain on depreciable property sales
|
(3,452
|
)
|
(589
|
)
|
||||||||||||||||||||
Funds from operations applicable to common shares
and Units |
$
|
56,781
|
113,358
|
$
|
0.50
|
$
|
48,215
|
102,176
|
$
|
0.47
|
(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 Condensed Consolidated Statements of Operations, totaling $16,300 and $15,183, and depreciation/amortization from Discontinued Operations of $0 and $79, less corporate-related depreciation and amortization on office equipment and other assets of $37 and $83, for the three months ended January 31, 2013 and 2012, respectively. |
(2) | UPREIT Units of the Operating Partnership are exchangeable for cash, or, at the Company's discretion, for common shares of beneficial interest on a one-for-one basis. |
(3) | Net income attributable to Investors Real Estate Trust is calculated on a per share basis. FFO is calculated on a per share and unit basis. |
(4) | 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 Condensed Consolidated Statements of Operations, totaling $49,028 and $44,865, and depreciation/amortization from Discontinued Operations of $114 and $248, less corporate-related depreciation and amortization on office equipment and other assets of $171 and $221, for the nine months ended January 31, 2013 and 2012, respectively. |
Month
|
Fiscal Year 2013
|
Fiscal Year 2012
|
||||||
July
|
$
|
.1300
|
$
|
.1715
|
||||
October
|
.1300
|
.1300
|
||||||
January
|
.1300
|
.1300
|
|
(in thousands)
|
|||||||||||||||||||||||||||||||
|
Future Principal Payments
|
|||||||||||||||||||||||||||||||
Mortgages
|
Remaining
Fiscal 2013
|
Fiscal 2014
|
Fiscal 2015
|
Fiscal 2016
|
Fiscal 2017
|
Thereafter
|
Total
|
Fair Value
|
||||||||||||||||||||||||
Fixed Rate
|
$
|
9,792
|
$
|
63,243
|
$
|
95,380
|
$
|
91,664
|
$
|
197,359
|
$
|
547,129
|
$
|
1,004,567
|
$
|
1,111,000
|
||||||||||||||||
Average Fixed Interest Rate(1)
|
5.66
|
%
|
5.58
|
%
|
5.47
|
%
|
5.39
|
%
|
4.90
|
%
|
||||||||||||||||||||||
Variable Rate
|
$
|
217
|
$
|
1,281
|
$
|
17,506
|
$
|
557
|
$
|
588
|
$
|
16,907
|
$
|
37,056
|
$
|
37,056
|
||||||||||||||||
Average Variable Interest Rate(1)
|
4.61
|
%
|
4.76
|
%
|
5.14
|
%
|
4.86
|
%
|
4.83
|
%
|
||||||||||||||||||||||
|
$
|
1,041,623
|
$
|
1,148,056
|
|
(in thousands)
|
|||||||||||||||||||||||||||
|
Future Interest Payments
|
|||||||||||||||||||||||||||
Mortgages
|
Remaining
Fiscal 2013
|
Fiscal 2014
|
Fiscal 2015
|
Fiscal 2016
|
Fiscal 2017
|
Thereafter
|
Total
|
|||||||||||||||||||||
Fixed Rate
|
$
|
14,206
|
$
|
55,533
|
$
|
50,983
|
$
|
45,075
|
$
|
36,447
|
$
|
89,879
|
$
|
292,123
|
||||||||||||||
Variable Rate
|
427
|
1,755
|
1,172
|
877
|
845
|
645
|
5,721
|
|||||||||||||||||||||
|
$
|
297,844
|
(1)
|
Interest rate given is for the entire year.
|
Exhibit No.
|
Description
|
Calculation of Ratio of Earnings to Fixed Charges and Earnings to Combined Fixed Charges and Preferred Share Distributions
|
|
Certification by Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
Certification by Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
101
|
The following materials from our Quarterly Report on Form 10-Q for the quarter ended January 31, 2013 formatted in eXtensible Business Reporting Language ("XBRL"): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Operations, (ii) the Condensed Consolidated Statements of Equity, (iv) the Condensed Consolidated Statements of Cash Flows, and (v) notes to these condensed consolidated financial statements.
|
/s/ Timothy P. Mihalick
|
|
Timothy P. Mihalick
|
|
President and Chief Executive Officer
|
|
|
|
/s/ Diane K. Bryantt
|
|
Diane K. Bryantt
|
|
Executive Vice President and Chief Financial Officer
|
|
|
|
Date: March 12, 2013
|
|
Exhibit No.
|
Description
|
Calculation of Ratio of Earnings to Fixed Charges and Earnings to Combined Fixed Charges and Preferred Share Distributions
|
|
Certification by Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
Certification by Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
101
|
The following materials from our Quarterly Report on Form 10-Q for the quarter ended January 31, 2013 formatted in eXtensible Business Reporting Language ("XBRL"): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Operations, (ii) the Condensed Consolidated Statements of Equity, (iv) the Condensed Consolidated Statements of Cash Flows, and (v) notes to these condensed consolidated financial statements.
|
|
Nine Months
Ended
|
Fiscal Year Ended
April 30,
|
||||||||||||||||||||||
|
January 31, 2013
|
2012
|
2011
|
2010
|
2009
|
2008
|
||||||||||||||||||
Earnings
|
||||||||||||||||||||||||
Income from continuing operations
|
$
|
14,629
|
$
|
9,783
|
$
|
4,475
|
$
|
5,996
|
$
|
9,858
|
$
|
13,945
|
||||||||||||
Add:
|
||||||||||||||||||||||||
Combined fixed charges and preferred distributions (see below)
|
55,405
|
68,172
|
64,954
|
71,497
|
72,027
|
66,317
|
||||||||||||||||||
Less:
|
||||||||||||||||||||||||
(Income) loss noncontrolling interests – consolidated real estate entities
|
(547
|
)
|
(135
|
)
|
180
|
(22
|
)
|
40
|
136
|
|||||||||||||||
Interest capitalized
|
(438
|
)
|
(571
|
)
|
(57
|
)
|
(19
|
)
|
(912
|
)
|
(506
|
)
|
||||||||||||
Preferred distributions
|
(6,350
|
)
|
(2,372
|
)
|
(2,372
|
)
|
(2,372
|
)
|
(2,372
|
)
|
(2,372
|
)
|
||||||||||||
Total earnings
|
$
|
62,699
|
$
|
74,877
|
$
|
67,180
|
$
|
75,080
|
$
|
78,641
|
$
|
77,520
|
||||||||||||
|
||||||||||||||||||||||||
Fixed charges
|
||||||||||||||||||||||||
Interest expensed
|
$
|
48,617
|
$
|
65,229
|
$
|
62,525
|
$
|
69,106
|
$
|
68,743
|
$
|
63,439
|
||||||||||||
Interest capitalized
|
438
|
571
|
57
|
19
|
912
|
506
|
||||||||||||||||||
Total fixed charges
|
$
|
49,055
|
$
|
65,800
|
$
|
62,582
|
$
|
69,125
|
$
|
69,655
|
$
|
63,945
|
||||||||||||
Preferred distributions
|
6,350
|
2,372
|
2,372
|
2,372
|
2,372
|
2,372
|
||||||||||||||||||
Total combined fixed charges and preferred distributions
|
$
|
55,405
|
$
|
68,172
|
$
|
64,954
|
$
|
71,497
|
$
|
72,027
|
$
|
66,317
|
||||||||||||
|
||||||||||||||||||||||||
Ratio of earnings to fixed charges
|
1.28
|
1.14
|
1.07
|
1.09
|
1.13
|
1.21
|
||||||||||||||||||
Ratio of earnings to combined fixed charges and preferred distributions
|
1.13
|
1.10
|
1.03
|
1.05
|
1.09
|
1.17
|
1. | I have reviewed this quarterly report on Form 10-Q of Investors Real Estate Trust; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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; |
c) | evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
By:
|
/s/ Timothy, P. Mihalick
|
|
|
Timothy, P. Mihalick , President & CEO
|
|
1. | I have reviewed this quarterly report on Form 10-Q of Investors Real Estate Trust; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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; |
c) | evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
By:
|
/s/ Diane K. Bryantt
|
|
|
Diane K. Bryantt, Executive Vice President & CFO
|
|
/s/ Timothy P. Mihalick
|
|
Timothy P. Mihalick
|
|
President and Chief Executive Officer
|
|
Date: March 12, 2013
|
|
|
|
|
|
/s/ Diane K. Bryantt
|
|
Diane K. Bryantt
|
|
Executive Vice President and Chief Financial Officer
|
|
Date: March 12, 2013
|
|
ACQUISITIONS AND DISPOSITIONS (Tables)
|
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jan. 31, 2013
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACQUISITIONS AND DISPOSITIONS [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisitions and development projects placed in service | The Company expensed approximately $125,000 and $466,000 of transaction costs related to acquisitions in the nine months ended January 31, 2013 and 2012, respectively. The Company's acquisitions and development projects placed in service during the nine months ended January 31, 2013 and 2012 are detailed below: Nine Months Ended January 31, 2013
Nine Months Ended January 31, 2012
Acquisitions in the nine months ended January 31, 2013 and 2012 are immaterial to our real estate portfolio both individually and in the aggregate, and consequently no proforma information is presented. The results of operations from acquired properties are included in the Condensed Consolidated Statements of Operations as of their acquisition date. The revenue and net income of our acquisitions in the nine months ended January 31, 2013 and 2012, respectively, (excluding development projects placed in service) are detailed below.
PROPERTY DISPOSITIONS During the third quarter of fiscal year 2013, the Company sold a multi-family residential property in Fargo, North Dakota, for a sale price of approximately $2.0 million. Mortgage debt in the amount of approximately $1.2 million was assumed by the buyer. During the second quarter of fiscal year 2013, the Company sold two condominium units and two-multi-family residential properties for a total sales price of $7.3 million. Mortgage debt in the amount of $4.6 million on the two multi-family residential properties was assumed by the buyer. During the first quarter of fiscal year 2013, IRET sold two condominium units and a commercial retail property. The Company had no real estate dispositions in the third quarter of fiscal year 2012. During the second quarter of fiscal year 2012, the Company sold a small retail property in Livingston, Montana, for a sale price of approximately $2.2 million, with approximately $1.2 million of the sale proceeds applied to pay off the outstanding mortgage loan balance on the property. The Company had no real estate dispositions in the first quarter of fiscal year 2012. The following table details the Company's dispositions during the nine months ended January 31, 2013 and 2012: Nine Months Ended January 31, 2013
Nine Months Ended January 31, 2012
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Results of operations from acquired properties | Acquisitions in the nine months ended January 31, 2013 and 2012 are immaterial to our real estate portfolio both individually and in the aggregate, and consequently no proforma information is presented. The results of operations from acquired properties are included in the Condensed Consolidated Statements of Operations as of their acquisition date. The revenue and net income of our acquisitions in the nine months ended January 31, 2013 and 2012, respectively, (excluding development projects placed in service) are detailed below.
|
FAIR VALUE OF FINANCIAL INSTRUMENTS (Details) (USD $)
In Thousands, unless otherwise specified |
Jan. 31, 2013
|
Apr. 30, 2012
|
---|---|---|
Carrying Amount [Member]
|
||
FINANCIAL ASSETS [Abstract] | ||
Cash and cash equivalents | $ 62,302 | $ 39,989 |
Other investments | 638 | 634 |
FINANCIAL LIABILITIES [Abstract] | ||
Other debt | 21,529 | 13,875 |
Line of credit | 10,000 | 39,000 |
Mortgages payable | 1,041,623 | 1,048,689 |
Fair Value [Member]
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FINANCIAL ASSETS [Abstract] | ||
Cash and cash equivalents | 62,302 | 39,989 |
Other investments | 638 | 634 |
FINANCIAL LIABILITIES [Abstract] | ||
Other debt | 21,558 | 13,973 |
Line of credit | 10,000 | 39,000 |
Mortgages payable | $ 1,148,056 | $ 1,087,082 |
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
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Jan. 31, 2013
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BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 • BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES BASIS OF PRESENTATION The accompanying condensed 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 condensed consolidated financial statements include the accounts of IRET and its interest in the Operating Partnership. The Company's interest in the Operating Partnership was 81.5% of the common units of the Operating Partnership as of January 31, 2013 and April 30, 2012. The limited partners in the Operating Partnership have a redemption option that they may exercise. Upon exercise of the redemption option by the limited partners, IRET has the choice of redeeming the limited partners' interests ("Units") for IRET common shares of beneficial interest, on a one-for-one basis, or making a 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 in general 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). The Operating Partnership and some limited partners have contractually agreed to a holding period of greater than one year and/or a greater number of redemptions during a calendar year. The condensed 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. UNAUDITED INTERIM FINANCIAL STATEMENTS The interim condensed consolidated financial statements of IRET have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and the applicable rules and regulations of the Securities and Exchange Commission ("SEC"). Accordingly, certain disclosures accompanying annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") are omitted. The year-end balance sheet data was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP. In the opinion of management, all adjustments, consisting solely of normal recurring adjustments, necessary for the fair presentation of the Company's financial position, results of operations and cash flows for the interim periods have been included. The current period's results of operations are not necessarily indicative of results which ultimately may be achieved for the year. The interim condensed consolidated financial statements and notes thereto should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended April 30, 2012, as filed with the SEC on July 16, 2012, as amended by the Current Report on Form 8-K filed with the SEC on December 10, 2012. RECENT ACCOUNTING PRONOUNCEMENTS In September 2011, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2011-08, Testing Goodwill for Impairment. This standard gives entities testing goodwill for impairment the option of performing a qualitative assessment before calculating the fair value of the reporting unit (step I of the goodwill impairment test). If entities determine, on the basis of qualitative factors, that the fair value of the reporting unit is more likely than not less than its carrying amount, the two-step impairment test would be required. Otherwise, no further testing is required. The ASU does not change how goodwill is calculated or assigned to reporting units, nor does it revise the requirement to test goodwill annually for impairment. The ASU is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011, with early adoption permitted. The Company adopted this update for fiscal year 2013, and does not expect the adoption will have an impact on the Company's consolidated results of operations or financial condition. In July 2012, the FASB issued ASU 2012-02, Topic 350 - Intangibles - Goodwill and Other: Testing Indefinite-Lived Intangible Assets for Impairment ("ASU 2012-02"), which amends Topic 350 to allow an entity to first assess qualitative factors to determine whether it is more likely than not that the fair value of an indefinite-lived intangible asset is less than its carrying value. An entity would not be required to determine the fair value of the indefinite-lived intangible unless the entity determines, based on the qualitative assessment, that it is more likely than not that its fair value is less than the carrying value. ASU 2012-02 is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012 and early adoption is permitted. The Company will adopt this standard for fiscal year 2014, and does not expect the adoption will have an impact on the Company's consolidated results of operations or financial condition. IMPAIRMENT OF LONG-LIVED ASSETS The Company periodically evaluates its long-lived assets, including its investments in real estate, for impairment indicators. The impairment evaluation is performed on assets by property such that assets for a property form an asset group. The judgments regarding the existence of impairment indicators are based on factors such as operational performance, market conditions, expected holding period of each asset group and legal and environmental concerns. If indicators exist, the Company compares the expected future undiscounted cash flows for the long-lived asset group against the carrying amount of that asset group. If the sum of the estimated undiscounted cash flows is less than the carrying amount of the asset group, an impairment loss is recorded for the difference between the estimated fair value and the carrying amount of the asset group. 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. During the nine months ended January 31, 2013, the Company incurred no losses due to impairment. During the nine months ended January 31, 2012, the Company incurred a loss of approximately $128,000 due to impairment of a retail property located in Kentwood, Michigan. The impairment was based on receipt of a market offer to purchase and the Company's intent to dispose of the property. A related impairment of $7,000 was recorded to write off goodwill assigned to the Kentwood property. The property was subsequently sold in the first quarter of fiscal year 2013. COMPENSATING BALANCES AND OTHER INVESTMENTS; LENDER HOLDBACKS 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. At January 31, 2013, the Company's compensating balances totaled $8.9 million and consisted of the following: Dacotah Bank, Minot, North Dakota, 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 $6.1 million; Peoples State Bank of Velva, North Dakota, deposit of $225,000; Equity Bank, Minnetonka, Minnesota, deposit of $300,000; Associated Bank, Green Bay, Wisconsin, deposit of $500,000; Venture Bank, Eagan, Minnesota, deposit of $500,000, and American National Bank, Omaha, Nebraska, deposit of $400,000. The deposits at United Community Bank and Equity Bank and a portion of the deposit at Dacotah Bank are held as certificates of deposit and comprise the $638,000 in other investments on the Condensed Consolidated Balance Sheets. The certificates of deposit have remaining terms of less than two years and the Company intends to hold them to maturity. The Company has a number of mortgage loans under which the lender retains a portion of the loan proceeds for the payment of construction costs or tenant improvements. The decrease of $1.5 million in lender holdbacks for improvements reflected in the Condensed Consolidated Statements of Cash Flows for the nine months ended January 31, 2013 is due primarily to the release of loan proceeds to the Company upon completion of these construction and tenant improvement projects, while the increase of $2.0 million represents additional amounts retained by lenders for new projects. 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 nine months ended January 31, 2013 and 2012, respectively, the Company added approximately $813,000 and $416,000 of new intangible assets and no new intangible liabilities. The weighted average lives of the intangible assets acquired in the nine months ended January 31, 2013 and 2012 are 0.5 years and 10.0 years, respectively. Amortization of intangibles related to above or below-market leases is recorded in real estate rentals in the Condensed Consolidated Statements of Operations. Amortization of other intangibles is recorded in depreciation/amortization related to real estate investments in the Condensed 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 January 31, 2013 and April 30, 2012 were as follows:
The effect of amortization of acquired below-market leases and acquired above-market leases on rental income was approximately $(7,000) and $(8,000) for the three months ended January 31, 2013 and 2012, respectively, and $(21,000) and $(40,000) for the nine months ended January 31, 2013 and 2012. 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:
Amortization of all other identified intangible assets (a component of depreciation and amortization expense) was $1.2 million and $1.2 million for the three months ended January 31, 2013 and 2012, respectively, and $4.3 million and $4.4 million for the nine months ended January 31, 2013 and 2012. The estimated annual amortization of all other identified intangible assets for each of the five succeeding fiscal years is as follows:
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. The book value of goodwill as of January 31, 2013 and April 30, 2012 was $1.1 million. The annual review at April 30, 2012 indicated no impairment to goodwill and there was no indication of impairment at January 31, 2013. During the nine months ended January 31, 2013, the Company disposed of two multi-family residential properties to which goodwill had been assigned, and as a result, approximately $14,000 of goodwill was derecognized. USE OF ESTIMATES The preparation of financial statements in conformity with U.S. GAAP 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. RECLASSIFICATIONS Certain previously reported amounts have been reclassified to conform to the current financial statement presentation. The Company reports, in discontinued operations, the results of operations and the related gains or losses of a property that has either been disposed of or is classified as held for sale and otherwise meets the classification of a discontinued operation. As a result of discontinued operations, retroactive reclassifications that change prior period numbers have been made. See Note 7 for additional information. In the third quarter of fiscal year 2013, the Company sold a multi-family residential property. During the first and second quarters of fiscal year 2013, the Company sold four condominium units, a retail property and two multi-family residential properties and classified an additional multi-family residential property as held for sale. During the first and third quarters of fiscal year 2012 the Company had no real estate dispositions; in the second quarter of fiscal year 2012, the Company sold a small retail property. The results of operations for these properties are included in income from discontinued operations in the Condensed Consolidated Statements of Operations. INVOLUNTARY CONVERSION OF ASSETS As previously reported, Minot, North Dakota, where IRET's corporate headquarters is located, experienced significant flooding in June 2011, resulting in extensive damage to the Arrowhead Shopping Center and to the Chateau Apartments property, which consisted of two 32-unit buildings. Additionally, on February 22, 2012, one of the buildings of the Chateau Apartments property, which had been undergoing restoration work following the flood, was completely destroyed by fire. The costs related to clean-up, redevelopment and loss of rents for these properties are being reimbursed to the Company by its insurance carrier, less the Company's deductible of $200,000 per event under the policy. The Company expensed $400,000 in fiscal year 2012 for the flood and fire deductibles During fiscal year 2012, for the Arrowhead and Chateau flood loss, the Company received $5.7 million of insurance proceeds for flood clean-up costs and redevelopment. In regard to Arrowhead Shopping Center, the total insurance proceeds for redevelopment at April 30, 2012 exceeded the estimated basis in the assets requiring replacement, resulting in the recognition of approximately $274,000 in gain from involuntary conversion in fiscal year 2012. IRET expects final settlement of the Arrowhead and Chateau flood insurance claims to occur in the fourth quarter of fiscal year 2013. In the second quarter of fiscal year 2013, for the Chateau fire loss, the Company received $2.9 million of insurance proceeds for redevelopment. The total insurance proceeds for redevelopment related to the Chateau fire at October 31, 2012 exceeded the estimated basis in the assets requiring replacement, resulting in the recognition of $2.3 million in gain from involuntary conversion in the second quarter of fiscal year 2013. The Company expects to rebuild the destroyed building but has no firm estimates at this time for costs or expected completion date of such rebuilding. IRET expects final settlement of the Chateau fire insurance claim to occur when the property is rebuilt. Final settlement was reached during the second quarter of fiscal year 2013 for business interruption from the flood and fire with proceeds received during the quarter of $409,000. During fiscal year 2012, approximately $666,000 was received, for total business interruption proceeds from the claims of $1.1 million. |