EX-99.2 3 iretexhibit992-03122014.htm CERTAIN SUPPLEMENTAL INFORMATION NOT INCLUDED IN THE EARNINGS RELEASE

Exhibit 99.2



Third Quarter Fiscal 2014
Supplemental Operating and Financial Data
for the Quarter Ended January 31, 2014

 
 
 
 
 
CONTACT:
Lindsey Knoop-Anderson
Director of Investor Relations
Direct Dial: 701-837-4738
E-Mail: landerson@iret.com
 
 
 
1400 31st Avenue SW, Suite 60
Minot, ND 58701
Tel: 701.837.4738
Fax: 701.838.7785
www.iret.com





Supplemental Financial and Operating Data
January 31, 2014

 
Page
 
 
Company Background and Highlights                                                                                                                                                                                                          
2
 
 
Property Cost by Segment                                                                                                                                                                                                          
5
 
 
Key Financial Data
 
Condensed Consolidated Balance Sheets                                                                                                                                                                                                  
6
Condensed Consolidated Statements of Operations                                                                                                                                                                                                  
7
Funds From Operations                                                                                                                                                                                                  
8
Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA)                                                                                                                                                                                                  
9
 
 
Capital Analysis
 
Long-Term Mortgage Debt Analysis                                                                                                                                                                                                  
10
Long-Term Mortgage Debt Detail                                                                                                                                                                                                  
11-13
Capital Analysis                                                                                                                                                                                                  
14
 
 
Portfolio Analysis
 
Stabilized Properties Net Operating Income Summary                                                                                                                                                                                                  
15
Net Operating Income Detail                                                                                                                                                                                                  
16-19
Stabilized Properties and Overall Physical Occupancy Levels by Segment                                                                                                                                                                                                  
20
 
 
Tenant Analysis
 
Multi-Family Residential Summary                                                                                                                                                                                                  
21
Commercial Leasing Summary                                                                                                                                                                                                  
22-25
10 Largest Commercial Tenants - Based on Annualized Base Rent                                                                                                                                                                                                  
26
Commercial Lease Expirations                                                                                                                                                                                                  
27
 
 
Growth and Strategy
 
Acquisition Summary                                                                                                                                                                                                  
28
Development Summary                                                                                                                                                                                                  
29
 
 
Definitions                                                                                                                                                                                                        
30
 




Company Background and Highlights
Third Quarter Fiscal 2014
Investors Real Estate Trust is a self-administered, equity real estate investment trust (REIT) investing in a portfolio of income-producing properties located primarily in the upper Midwest.  IRET's portfolio is diversified among multi-family residential; commercial office; commercial healthcare, including senior housing; commercial industrial and commercial retail segments.
During the third quarter of fiscal year 2014, the Company closed on its acquisition of:
·
an approximately 3.4-acre parcel of vacant land in Fruitland, Idaho, acquired for possible future development, for a purchase price of $335,000, paid in cash.
During the third quarter of fiscal year 2014, the Company placed in service the 132-unit Cypress Court multi-family residential property in St. Cloud, Minnesota, owned by a joint venture entity in which the Company has an approximately 86% interest and the 146-unit River Ridge multi-family residential property in Bismarck, North Dakota. During the third quarter of fiscal year 2014, the Company sold two multi-family residential properties, three commercial industrial properties and two commercial retail properties for a total sales price of $11.7 million.
During the third quarter of fiscal year 2014, the Company's commercial office segment, mostly concentrated in Minnesota, continued to be pressured by a number of adverse macro conditions, including weak job and wage growth. Although overall employment levels in the office sector remain slightly above pre-recession levels in most of the Company's markets, businesses appear to be maintaining their goal of increasing the density of their work spaces by placing more employees in less total square footage, and downsizing upon lease renewals. As a result, even though the Company has experienced some modest growth in occupancy levels during the third quarter of fiscal year 2014 compared to the third quarter of fiscal year 2013, the Company continues to expect a slow and uneven recovery in its office segment.
Continued high occupancy in the Company's multi-family residential portfolio provided the ability to raise rents during the third quarter of fiscal year 2014, and real estate revenue from stabilized properties in the multi-family residential segment increased in the three months ended January 31, 2014 compared to the same period in the prior fiscal year. Occupancy levels decreased slightly on a stabilized and an all-property basis compared to the same period of the prior fiscal year. The 132-unit Cypress Court apartments in St. Cloud, Minnesota (owned by a joint venture entity in which the Company has an approximately 86% interest) and the Company's 146-unit River Ridge apartment property in Bismarck, North Dakota, were placed in service during the quarter, with both projects experiencing strong demand; Cypress Court was 66.7% occupied and River Ridge was 81.5% occupied as of January 31, 2014. However, the Company continues to observe considerable multi-family residential development activity in its markets, and as this new construction is completed and leased, the Company will experience increased competition for tenants.
The Company's senior housing assets continue to benefit from a recovery in the housing market, as occupancy trends are closely aligned with the ability of seniors to sell their homes in anticipation of moving to a senior care facility. Results in the Company's healthcare segment remain stable with modest increases in both occupancy and rents.
Subsequent to the end of the third quarter of fiscal year 2014, Company management presented to the Company's Board of Trustees a strategic plan which the Company expects will drive changes in three main areas. First, the Company plans to continue its focus on identifying for disposition properties whose location, age, or need for significant tenant improvements or capital expenditures suggest that the Company's investment may be better deployed elsewhere. In particular, over the next twelve to eighteen months, the Company expects to identify properties in its commercial segments as candidates for disposition. The Company expects to focus any future commercial office property acquisitions in the Minneapolis/St. Paul market. Second, the Company plans to direct new investments primarily toward its healthcare (in particular, senior housing) and multi-family residential segments, which it believes will provide the best opportunities for growth. Within its healthcare segment, the Company also plans to target on-campus medical office properties in larger markets in the Great Plains region, and to pursue relationship-driven build-to-suit opportunities. Within the multi-family residential segment, the Company plans to target tertiary markets within the Great Plains region that offer the Company operating efficiencies and a critical mass for brand presence. Third, management plans to further de-emphasize its retail segment, with the goal of identifying for sale assets within this portfolio by fiscal year 2016. In addition to these three major areas of focus, the Company will continue to work to enhance portfolio operational efficiencies.  The Company believes that this strategic plan will help it create a strong foundation for growth in the long term.
In the third quarter of fiscal year 2014, IRET paid its 171st consecutive quarterly distribution. The $0.1300 per share/unit distribution was payable on January 15, 2014. Subsequent to the end of the third quarter of fiscal year 2014, on March 4, 2014, the Company's Board of Trustees declared a regular quarterly distribution of $0.1300 per share and unit on the Company's common shares of beneficial interest and the limited partnership units of IRET Properties, payable April 1, 2014 to common shareholders and unitholders of record on March 17, 2014. Also on March 4, 2014, the Company's Board of Trustees' declared a distribution of $0.5156 per share on the Company's Series A preferred shares of beneficial interest, payable March 31, 2014 to Series A preferred shareholders of record on March 17, 2014, and declared a distribution of $0.4968 per share on the Company's Series B preferred shares of beneficial interest, payable March 31, 2014 to Series B preferred shareholders of record on March 17, 2014.
As of January 31, 2014, IRET owns a diversified portfolio of 257 properties consisting of 92 multi-family residential properties, 65 commercial office properties, 66 commercial healthcare properties (including senior housing), 8 commercial industrial properties and 26 commercial retail properties.  IRET's common shares are publicly traded on the New York Stock Exchange (NYSE: IRET).





Company Snapshot
(as of January 31, 2014)
Company Headquarters                                                                                              
Minot, North Dakota
Fiscal Year-End                                                                                              
April 30
Reportable Segments                                                                                              
Multi-Family Residential, Commercial Office, Commercial Healthcare, Commercial Industrial, Commercial Retail
Total Properties                                                                                              
257
Total Square Feet
 
(commercial properties)                                                                                          
10.4 million
Total Units
 
(multi-family residential properties)                                                                                          
10,725
Common Shares Outstanding (thousands)                                                                                              
106,937
Limited Partnership Units Outstanding (thousands)
21,799
Common Share Distribution - Quarter/Annualized
$0.13/$0.52
Dividend Yield                                                                                              
6.0%
Total Capitalization (see p.14 for detail)                                                                                              
$2.3 billion


Investor Information
(as of January 31, 2014)
Board of Trustees
Jeffrey L. Miller                                                            
Trustee and Chairman
John D. Stewart                                                            
Trustee, Vice Chairman, and Chair of Nominating and Governance Committee
Jeffrey K. Woodbury                                                            
Trustee, Chair of Audit Committee
Linda J. Hall                                                            
Trustee, Chair of Compensation Committee
Terrance P. Maxwell                                                            
Trustee
Stephen L. Stenehjem                                                            
Trustee
Timothy P. Mihalick                                                            
Trustee, President and Chief Executive Officer
Thomas A. Wentz, Jr.                                                            
Trustee, Executive Vice President and Chief Operating Officer


Management
Timothy P. Mihalick                                                            
President and Chief Executive Officer; Trustee
Thomas A. Wentz, Jr                                                            
Executive Vice President and Chief Operating Officer; Trustee
Diane K. Bryantt                                                            
Executive Vice President and Chief Financial Officer
Michael A. Bosh                                                            
Executive Vice President, General Counsel and Assistant Secretary
Mark Reiling                                                            
Executive Vice President of Asset Management
Charles A. Greenberg                                                            
Senior Vice President, Commercial Asset Management
Ted E. Holmes                                                            
Senior Vice President, Finance
Andrew Martin                                                            
Senior Vice President, Residential Property Management


Corporate Headquarters:
1400 31st Avenue SW, Suite 60
Post Office Box 1988
Minot, North Dakota 58702-1988
Trading Symbol:  IRET
Stock Exchange Listing:  NYSE
Investor Relations:
Lindsey Knoop-Anderson
landerson@iret.com





Common Share Data (NYSE: IRET)*
 
3rd Quarter
Fiscal Year 2014
2nd Quarter
Fiscal Year 2014
1st Quarter
Fiscal Year 2014
4th Quarter
Fiscal Year 2013
3rd Quarter
Fiscal Year 2013
High Closing Price
$
8.94
$
9.03
$
9.77
$
10.00
$
9.40
Low Closing Price
$
8.24
$
8.05
$
8.09
$
9.20
$
7.73
Average Closing Price
$
8.58
$
8.41
$
9.03
$
9.59
$
8.70
Closing Price at end of quarter
$
8.69
$
8.62
$
8.64
$
9.73
$
9.36
Common Share Distributions—annualized
$
0.520
$
0.520
$
0.520
$
0.520
$
0.520
Closing Dividend Yield - annualized
 
6.0%
 
6.0%
 
6.0%
 
5.3%
 
5.6%
Closing common shares outstanding (thousands)
 
106,937
 
105,554
 
104,226
 
101,488
 
94,386
Closing limited partnership units outstanding (thousands)
 
21,799
 
21,836
 
21,849
 
21,635
 
21,489
Closing market value of outstanding common shares, plus imputed closing market value of outstanding limited partnership units (thousands)
$
1,118,716
$
1,098,102
$
1,089,288
$
1,197,987
$
1,084,590

* Effective December 18, 2012, IRET transferred the listing of its common shares and Series A preferred shares to the New York Stock Exchange from the NASDAQ Global Select Market.

Certain statements in these supplemental disclosures are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results to differ materially from projected results. Such risks, uncertainties and other factors include, but are not limited to: intentions and expectations regarding future distributions on our common shares and units, fluctuations in interest rates, the effect of government regulation, the availability of capital, changes in general and local economic and real estate market conditions, competition, our ability to attract and retain skilled personnel, and those risks and uncertainties detailed from time to time in our filings with the Securities and Exchange Commission, including our 2013 Form 10-K. We assume no obligation to update or supplement forward-looking statements that become untrue because of subsequent events.
Third Quarter Fiscal 2014 Developments Placed in Service
 
 
 
 
Cypress Court (interior)
906 Cypress Road
 St. Cloud, MN 56303
River Ridge Apartments (interior)
2130 S. 12th Street
 Bismarck, ND 58504
 





Property Cost by Segment – Third Quarter Fiscal 2014
With investments in the multi-family residential and commercial office, commercial healthcare, commercial industrial and commercial retail segments, IRET's diversified portfolio helps to provide stability during market fluctuations in returns from specific property types.







INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
(in thousands)

 
1/31/2014
10/31/2013
7/31/2013
4/30/2013
1/31/2013
ASSETS
 
 
 
 
 
 
 
 
 
 
Real estate investments
 
 
 
 
 
 
 
 
 
 
Property owned
$
2,042,290
$
2,032,747
$
2,016,523
$
2,032,970
$
2,007,832
Less accumulated depreciation
 
(439,233)
 
(431,318)
 
(429,376)
 
(420,421)
 
(408,400)
 
 
1,603,057
 
1,601,429
 
1,587,147
 
1,612,549
 
1,599,432
Development in progress
 
89,086
 
90,052
 
77,396
 
46,782
 
20,127
Unimproved land
 
21,498
 
21,619
 
20,774
 
21,503
 
18,879
Total real estate investments
 
1,713,641
 
1,713,100
 
1,685,317
 
1,680,834
 
1,638,438
Real estate held for sale
 
0
 
2,620
 
3,969
 
0
 
733
Cash and cash equivalents
 
53,494
 
68,727
 
93,193
 
94,133
 
62,302
Other investments
 
643
 
642
 
640
 
639
 
638
Receivable arising from straight-lining of rents, net of allowance
 
27,026
 
26,336
 
26,671
 
26,354
 
25,471
Accounts receivable, net of allowance
 
15,540
 
6,541
 
8,370
 
4,534
 
3,560
Real estate deposits
 
3,502
 
230
 
489
 
196
 
165
Prepaid and other assets
 
8,197
 
7,605
 
4,741
 
5,124
 
5,545
Intangible assets, net of accumulated amortization
 
34,008
 
35,625
 
36,989
 
40,457
 
41,009
Tax, insurance, and other escrow
 
24,550
 
11,864
 
12,344
 
12,569
 
13,306
Property and equipment, net of accumulated depreciation
 
1,719
 
1,191
 
1,217
 
1,221
 
1,288
Goodwill
 
1,100
 
1,100
 
1,100
 
1,106
 
1,106
Deferred charges and leasing costs, net of accumulated amortization
 
21,138
 
20,666
 
21,602
 
22,387
 
22,513
TOTAL ASSETS
$
1,904,558
$
1,896,247
$
1,896,642
$
1,889,554
$
1,816,074
 
 
 
 
 
 
 
 
 
 
 
LIABILITIES AND EQUITY
 
 
 
 
 
 
 
 
 
 
LIABILITIES
 
 
 
 
 
 
 
 
 
 
Accounts payable and accrued expenses
$
54,337
$
57,453
$
52,563
$
50,797
$
44,540
Revolving line of credit
 
22,500
 
10,000
 
10,000
 
10,000
 
10,000
Mortgages payable
 
1,008,524
 
1,021,170
 
1,030,407
 
1,049,206
 
1,041,623
Other
 
47,767
 
31,689
 
32,366
 
18,170
 
21,632
TOTAL LIABILITIES
 
1,133,128
 
1,120,312
 
1,125,336
 
1,128,173
 
1,117,795
 
 
 
 
 
 
 
 
 
 
 
EQUITY
 
 
 
 
 
 
 
 
 
 
Investors Real Estate Trust shareholders' equity
 
 
 
 
 
 
 
 
 
 
Series A Preferred Shares of Beneficial Interest
 
27,317
 
27,317
 
27,317
 
27,317
 
27,317
Series B Preferred Shares of Beneficial Interest
 
111,357
 
111,357
 
111,357
 
111,357
 
111,357
Common Shares of Beneficial Interest
 
829,816
 
818,516
 
807,928
 
784,454
 
721,742
Accumulated distributions in excess of net income
 
(344,294)
 
(331,116)
 
(323,406)
 
(310,341)
 
(305,145)
Total Investors Real Estate Trust shareholders' equity
 
624,196
 
626,074
 
623,196
 
612,787
 
555,271
Noncontrolling interests – Operating Partnership
 
117,803
 
120,678
 
122,334
 
122,539
 
121,940
Noncontrolling interests – consolidated real estate entities
 
29,431
 
29,183
 
25,776
 
26,055
 
21,068
Total equity
 
771,430
 
775,935
 
771,306
 
761,381
 
698,279
TOTAL LIABILITIES AND EQUITY
$
1,904,558
$
1,896,247
$
1,896,642
$
1,889,554
$
1,816,074






INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
(in thousands, except per share data)

 
Nine Months Ended
Three Months Ended
OPERATING RESULTS
1/31/2014
1/31/2013
1/31/2014
10/31/2013
7/31/2013
4/30/2013
1/31/2013
Real estate revenue
$
198,499
$
183,874
$
67,629
$
65,772
$
65,098
$
64,184
$
63,080
Real estate expenses
 
78,898
 
73,102
 
25,927
 
26,331
 
26,640
 
25,957
 
25,348
Gain on involuntary conversion
 
2,480
 
2,263
 
1,514
 
0
 
966
 
2,821
 
0
Net operating income
 
122,081
 
113,035
 
43,216
 
39,441
 
39,424
 
41,048
 
37,732
Depreciation/amortization
 
(53,656)
 
(46,505)
 
(17,489)
 
(17,167)
 
(19,000)
 
(15,828)
 
(15,493)
Administrative expenses, advisory and trustee services
 
(7,942)
 
(6,402)
 
(2,662)
 
(2,527)
 
(2,753)
 
(2,092)
 
(2,245)
Other expenses
 
(1,630)
 
(1,496)
 
(273)
 
(678)
 
(679)
 
(677)
 
(464)
Impairment of real estate investments
 
(4,798)
 
0
 
(4,798)
 
0
 
0
 
0
 
0
Interest expense
 
(44,525)
 
(46,554)
 
(15,130)
 
(14,799)
 
(14,596)
 
(14,600)
 
(15,197)
Interest and other income
 
1,602
 
600
 
740
 
652
 
210
 
148
 
255
Income from continuing operations
 
11,132
 
12,678
 
3,604
 
4,922
 
2,606
 
7,999
 
4,588
Income from discontinued operations
 
6,450
 
5,481
 
465
 
5,375
 
610
 
3,814
 
1,565
Net income
$
17,582
$
18,159
$
4,069
$
10,297
$
3,216
$
11,813
$
6,153
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income attributable to noncontrolling interest – Operating Partnership
 
(1,406)
 
(2,097)
 
(130)
 
(1,226)
 
(50)
 
(1,536)
 
(556)
Net income attributable to noncontrolling interests – consolidated real estate entities
 
(808)
 
(547)
 
(436)
 
(284)
 
(88)
 
(262)
 
(273)
Net income attributable to Investors Real Estate Trust
 
15,368
 
15,515
 
3,503
 
8,787
 
3,078
 
10,015
 
5,324
Dividends to preferred shareholders
 
(8,636)
 
(6,350)
 
(2,879)
 
(2,878)
 
(2,879)
 
(2,879)
 
(2,879)
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS
$
6,732
$
9,165
$
624
$
5,909
$
199
$
7,136
$
2,445
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Per Share Data
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings (loss) per common share from continuing operations – Investors Real Estate Trust – basic & diluted
$
.01
$
.05
$
.00
$
.01
$
.00
$
.04
$
.01
Earnings per common share from discontinued operations – Investors Real Estate Trust – basic & diluted
 
.05
 
.05
 
.00
 
.05
 
.00
 
.03
 
.02
Net income per common share – basic & diluted
$
.06
$
.10
$
.00
$
.06
$
.00
$
.07
$
.03
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Percentage of Revenues
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Real estate expenses
 
39.7%
 
39.8%
 
38.3%
 
40.0%
 
40.9%
 
40.4%
 
40.2%
Depreciation/amortization
 
27.0%
 
25.3%
 
25.9%
 
26.1%
 
29.2%
 
24.7%
 
24.6%
General and administrative
 
4.0%
 
3.5%
 
3.9%
 
3.8%
 
4.2%
 
3.3%
 
3.6%
Interest
 
22.4%
 
25.3%
 
22.4%
 
22.5%
 
22.4%
 
22.7%
 
24.1%
Income from discontinued operations
 
3.2%
 
3.0%
 
0.7%
 
8.2%
 
0.9%
 
5.9%
 
2.5%
Net income
 
8.9%
 
9.9%
 
6.0%
 
15.7%
 
4.9%
 
18.4%
 
9.8%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ratios
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EBITDA(1)/Interest expense
 
2.25x
 
2.23x
 
2.13x
 
2.37x
 
2.23x
 
2.41x
 
2.34x
EBITDA(1)/Interest expense plus preferred distributions
 
1.90x
 
1.98x
 
1.81x
 
2.00x
 
1.88x
 
2.03x
 
1.98x

(1) See Definitions on page 30.  EBITDA is a non-GAAP measure; see page 9 for a reconciliation of EBITDA to net income.





INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
FUNDS FROM OPERATIONS (unaudited)
(in thousands, except per share and unit data)

 
Nine Months Ended
Three Months Ended
 
1/31/2014
1/31/2013
1/31/2014
10/31/2013
7/31/2013
4/30/2013
1/31/2013
Funds From Operations(1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income attributable to Investors Real Estate Trust
$
15,368
$
15,515
$
3,503
$
8,787
$
3,078
$
10,015
$
5,324
Less dividends to preferred shareholders
 
(8,636)
 
(6,350)
 
(2,879)
 
(2,878)
 
(2,879)
 
(2,879)
 
(2,879)
Net income available to common shareholders
 
6,732
 
9,165
 
624
 
5,909
 
199
 
7,136
 
2,445
Adjustments:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Noncontrolling interests – Operating Partnership
 
1,406
 
2,097
 
130
 
1,226
 
50
 
1,536
 
556
Depreciation and amortization
 
54,591
 
48,971
 
17,546
 
17,490
 
19,555
 
16,572
 
16,263
Impairment of real estate investments
 
6,658
 
0
 
4,798
 
57
 
1,803
 
305
 
0
Gain on depreciable property sales
$
(6,999)
$
(3,452)
 
(358)
 
(4,698)
 
(1,943)
 
(3,433)
 
(772)
Funds from operations applicable to common shares and Units
 
62,388
 
56,781
$
22,740
$
19,984
$
19,664
$
22,116
$
18,492
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
FFO per share and unit - basic and diluted
$
0.49
$
0.50
$
0.17
$
0.16
$
0.16
$
0.19
$
0.16
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted funds from operations(1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Funds from operations applicable to common shares and Units
$
62,388
$
56,781
$
22,740
$
19,984
$
19,664
$
22,116
$
18,492
Adjustments:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Tenant improvements at stabilized properties
 
(8,389)
 
(6,747)
 
(4,205)
 
(1,841)
 
(2,343)
 
(3,092)
 
(3,156)
Leasing costs at stabilized properties
 
(2,870)
 
(4,517)
 
(1,219)
 
(735)
 
(916)
 
(610)
 
(2,231)
Recurring capital expenditures(1)
 
(3,858)
 
(5,303)
 
(1,093)
 
(1,364)
 
(1,401)
 
(687)
 
(1,614)
Straight-line rents
 
(2,136)
 
(2,208)
 
(818)
 
(666)
 
(652)
 
(883)
 
(576)
Non-real estate depreciation
 
266
 
299
 
99
 
82
 
85
 
82
 
80
Gain on involuntary conversion
 
(2,480)
 
(2,263)
 
(1,514)
 
0
 
(966)
 
(2,821)
 
0
Adjusted funds from operations applicable to common shares and Units
$
42,921
$
36,042
$
13,990
$
15,460
$
13,471
$
14,105
$
10,995
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
AFFO per share and unit - basic and diluted
$
0.34
$
0.32
$
0.11
$
0.12
$
0.11
$
0.12
$
0.10
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average shares and units
 
126,302
 
113,358
 
128,027
 
126,713
 
124,179
 
118,192
 
115,207

(1)
See Definitions on page 30.






INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION (EBITDA) (unaudited)
(in thousands)

 
Nine Months Ended
Three Months Ended
 
1/31/2014
1/31/2013
1/31/2014
10/31/2013
07/31/2013
04/30/2013
01/31/2013
EBITDA(1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income attributable to Investors Real Estate Trust
$
15,368
$
15,515
$
3,503
$
8,787
$
3,078
$
10,015
$
5,324
Adjustments:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Noncontrolling interests – Operating Partnership
 
1,406
 
2,097
 
130
 
1,226
 
50
 
1,536
 
556
Income before noncontrolling interests – Operating Partnership
 
16,774
 
17,612
 
3,633
 
10,013
 
3,128
 
11,551
 
5,880
Add:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest expense
 
44,946
 
48,617
 
15,159
 
14,904
 
14,883
 
15,069
 
15,731
Depreciation/amortization related to real estate investments
 
52,093
 
46,716
 
16,825
 
16,675
 
18,593
 
15,759
 
15,506
Amortization related to non-real estate investments
 
2,590
 
2,426
 
758
 
839
 
993
 
848
 
794
Amortization related to real estate revenues(2)
 
175
 
126
 
62
 
59
 
54
 
49
 
43
Less:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest income
 
(1,346)
 
(176)
 
(573)
 
(585)
 
(188)
 
(46)
 
(70)
Gain on sale of real estate, land and other investments
 
(6,999)
 
(3,452)
 
(358)
 
(4,698)
 
(1,943)
 
(3,433)
 
(772)
Gain on involuntary conversion
 
(2,480)
 
(2,263)
 
(1,514)
 
0
 
(966)
 
(2,821)
 
0
EBITDA
$
105,753
$
109,606
$
33,992
$
37,207
$
34,554
$
36,976
$
37,112
(1) Definitions on page 30.
(2) Included in real estate revenue in the Statement of Operations.






INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
LONG-TERM MORTGAGE DEBT* ANALYSIS
(in thousands)
Debt Maturity Schedule
Annual Expirations
Total Mortgage Debt*
 

 
Future Maturities of Mortgage Debt
 
Fiscal Year
Fixed Debt
Variable Debt
Total Debt
Weighted
Average(1)
% of
Total Debt
2014
$
12,798
$
2,807
$
15,605
4.64%
1.6%
2015
 
66,537
 
0
 
66,537
5.56%
6.6%
2016
 
73,185
 
0
 
73,185
5.50%
7.3%
2017
 
171,689
 
0
 
171,689
6.12%
17.0%
2018
 
76,265
 
0
 
76,265
5.03%
7.5%
2019
 
91,574
 
5,495
 
97,069
5.86%
9.6%
2020
 
111,908
 
0
 
111,908
5.87%
11.1%
2021
 
131,909
 
0
 
131,909
5.30%
13.1%
2022
 
130,959
 
0
 
130,959
5.61%
13.0%
2023
 
38,114
 
0
 
38,114
4.25%
3.8%
Thereafter
 
95,284
 
0
 
95,284
4.48%
9.4%
Total maturities
$
1,000,222
$
8,302
$
1,008,524
5.48%
100.0%
(1)
Weighted average interest rate of debt that matures in fiscal year.
 
1/31/2014
10/31/2013
7/31/2013
4/30/2013
1/31/2013
Balances Outstanding
 
 
 
 
 
 
 
 
 
 
Mortgage
 
 
 
 
 
 
 
 
 
 
Fixed rate
$
1,000,222
$
1,012,813
$
1,014,632
$
1,022,990
$
1,004,567
Variable rate
 
8,302
 
8,357
 
15,775
 
26,216
 
37,056
Mortgage total
$
1,008,524
$
1,021,170
$
1,030,407
$
1,049,206
$
1,041,623
 
 
 
 
 
 
 
 
 
 
 
Weighted Average Interest Rates
 
 
 
 
 
 
 
 
 
 
Secured
 
5.48%
 
5.50%
 
5.54%
 
5.55%
 
5.65%





INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
LONG-TERM MORTGAGE DEBT* DETAIL AS OF JANUARY 31, 2014
(in thousands)
Property
Maturity Date
Fiscal 2014
Fiscal 2015
Fiscal 2016
Fiscal 2017
Thereafter
Total(1)
 
 
 
 
 
 
 
 
Multi-Family Residential
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Monticello Village - Monticello, MN (2)
3/1/2014
 
$
2,808
$
0
$
0
$
0
$
0
$
2,808
 Evergreen II - Isanti, MN
11/1/2014
 
 
0
 
2,119
 
0
 
0
 
0
 
2,119
 Campus Center - St Cloud, MN
6/1/2015
 
 
0
 
0
 
1,225
 
0
 
0
 
1,225
 Campus Knoll - St Cloud, MN
6/1/2015
 
 
0
 
0
 
817
 
0
 
0
 
817
 Landmark - Grand Forks, ND
8/24/2015
 
 
0
 
0
 
1,654
 
0
 
0
 
1,654
 Regency Park Estates - St Cloud, MN
1/1/2016
 
 
0
 
0
 
6,864
 
0
 
0
 
6,864
 Pebble Springs – Bismarck, ND
7/1/2016
 
 
0
 
0
 
0
 
779
 
0
 
779
 
 Southview – Minot, ND
7/1/2016
 
 
0
 
0
 
0
 
1,065
 
0
 
1,065
 Summary of Debt due after Fiscal 2017
 
 
 
0
 
0
 
0
 
0
 
372,319
 
372,319
Sub-Total Multi-Family Residential
 
 
$
2,808
$
2,119
$
10,560
$
1,844
$
372,319
$
389,650
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial Office
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Whitewater Plaza - Minnetonka, MN (3)
3/1/2014
 
$
2,487
$
0
$
0
$
0
$
0
$
2,487
 Whitewater Plaza - Minnetonka, MN (3)
3/1/2014
 
 
1,289
 
0
 
0
 
0
 
0
 
1,289
 Viromed - Eden Prairie, MN (2)
4/1/2014
 
 
83
 
0
 
0
 
0
 
0
 
83
 Wirth Corporate Center - Golden Valley, MN (4)
4/1/2014
 
 
3,538
 
0
 
0
 
0
 
0
 
3,538
 TCA Building - Eagan, MN (5)
5/1/2014
 
 
0
 
6,722
 
0
 
0
 
0
 
6,722
 Burnsville Bluffs II - Burnsville, MN
8/8/2014
 
 
0
 
1,690
 
0
 
0
 
0
 
1,690
 Plymouth IV - Plymouth, MN
8/8/2014
 
 
0
 
3,117
 
0
 
0
 
0
 
3,117
 Plymouth V - Plymouth, MN
8/8/2014
 
 
0
 
3,642
 
0
 
0
 
0
 
3,642
 Plaza VII - Boise, ID
9/1/2014
 
 
0
 
946
 
0
 
0
 
0
 
946
 Crosstown Centre - Eden Prairie, MN
12/1/2014
 
 
0
 
3,209
 
0
 
0
 
0
 
3,209
 Crosstown Centre - Eden Prairie, MN
12/1/2014
 
 
0
 
9,627
 
0
 
0
 
0
 
9,627
 Northgate I - Maple Grove, MN
12/10/2014
 
 
0
 
5,024
 
0
 
0
 
0
 
5,024
 Plymouth I - Plymouth, MN
12/10/2014
 
 
0
 
1,126
 
0
 
0
 
0
 
1,126
 Plymouth II - Plymouth, MN
12/10/2014
 
 
0
 
1,126
 
0
 
0
 
0
 
1,126
 Plymouth III - Plymouth, MN
12/10/2014
 
 
0
 
1,386
 
0
 
0
 
0
 
1,386
 Benton Business Park - Sauk Rapids, MN
1/1/2015
 
 
0
 
508
 
0
 
0
 
0
 
508
 West River Business Park - Waite Park, MN
1/1/2015
 
 
0
 
508
 
0
 
0
 
0
 
508
 Highlands Ranch I - Highlands Ranch, CO
3/1/2015
 
 
0
 
8,050
 
0
 
0
 
0
 
8,050
 Highlands Ranch II - Highlands Ranch, CO
3/1/2015
 
 
0
 
7,677
 
0
 
0
 
0
 
7,677
 US Bank Financial Center - Bloomington, MN
7/1/2015
 
 
0
 
0
 
13,186
 
0
 
0
 
13,186
 Rapid City 900 Concourse Drive - Rapid City, SD
8/1/2015
 
 
0
 
0
 
818
 
0
 
0
 
818
 Westgate I - Boise, ID
8/1/2015
 
 
0
 
0
 
1,167
 
0
 
0
 
1,167
 Westgate II - Boise, ID
8/1/2015
 
 
0
 
0
 
2,857
 
0
 
0
 
2,857
 Brook Valley I - LaVista, NE
1/1/2016
 
 
0
 
0
 
1,268
 
0
 
0
 
1,268
 Spring Valley IV - Omaha, NE
1/1/2016
 
 
0
 
0
 
754
 
0
 
0
 
754
 Spring Valley V - Omaha, NE
1/1/2016
 
 
0
 
0
 
830
 
0
 
0
 
830
 Spring Valley X - Omaha, NE
1/1/2016
 
 
0
 
0
 
770
 
0
 
0
 
770
 Spring Valley XI - Omaha, NE
1/1/2016
 
 
0
 
0
 
755
 
0
 
0
 
755
 American Corporate Center – Mendota Heights, MN
9/1/2016
 
 
0
 
0
 
0
 
8,824
 
0
 
8,824
 Mendota Office Center I – Mendota Heights, MN
9/1/2016
 
 
0
 
0
 
0
 
3,800
 
0
 
3,800
 Mendota Office Center II - Mendota Heights, MN
9/1/2016
 
 
0
 
0
 
0
 
5,614
 
0
 
5,614
 Mendota Office Center III - Mendota Heights, MN
9/1/2016
 
 
0
 
0
 
0
 
3,858
 
0
 
3,858





 INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
LONG-TERM MORTGAGE DEBT* DETAIL AS OF JANUARY 31, 2014 (continued)
(in thousands)
Property
Maturity Date
Fiscal 2014
Fiscal 2015
Fiscal 2016
Fiscal 2017
Thereafter
Total(1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial Office - continued
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Mendota Office Center IV - Mendota Heights, MN
9/1/2016
 
$
0
$
0
$
0
$
4,587
$
0
$
4,587
 Corporate Center West – Omaha, NE
10/6/2016
 
 
0
 
0
 
0
 
17,315
 
0
 
17,315
 Farnam Executive Center – Omaha, NE
10/6/2016
 
 
0
 
0
 
0
 
12,160
 
0
 
12,160
 Flagship – Eden Prarie, MN
10/6/2016
 
 
0
 
0
 
0
 
21,565
 
0
 
21,565
 Gateway Corporate Center – Woodbury, MN
10/6/2016
 
 
0
 
0
 
0
 
8,700
 
0
 
8,700
 Miracle Hills One – Omaha, NE
10/6/2016
 
 
0
 
0
 
0
 
8,895
 
0
 
8,895
 Pacific Hills – Omaha, NE
10/6/2016
 
 
0
 
0
 
0
 
16,770
 
0
 
16,770
 Riverport – Maryland Heights, MO
10/6/2016
 
 
0
 
0
 
0
 
19,690
 
0
 
19,690
 Timberlands – Leawood, KS
10/6/2016
 
 
0
 
0
 
0
 
13,155
 
0
 
13,155
 Woodlands Plaza IV – Maryland Heights, MO
10/6/2016
 
 
0
 
0
 
0
 
4,360
 
0
 
4,360
 2030 Cliff Road – Eagan, MN
1/11/2017
 
 
0
 
0
 
0
 
945
 
0
 
945
 Summary of Debt due after Fiscal 2017
 
 
 
0
 
0
 
0
 
0
 
98,908
 
98,908
Sub-Total Commercial Office
 
 
$
7,397
$
54,358
$
22,405
$
150,238
$
98,908
$
333,306
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial Healthcare
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 High Pointe Health Campus - Lake Elmo, MN (6)
4/1/2014
 
$
5,400
$
0
$
0
$
0
$
0
$
5,400
 Edgewood Vista - Billings, MT
12/10/2014
 
 
0
 
1,856
 
0
 
0
 
0
 
1,856
 Edgewood Vista - East Grand Forks, MN
12/10/2014
 
 
0
 
2,827
 
0
 
0
 
0
 
2,827
 Edgewood Vista - Sioux Falls, SD
12/10/2014
 
 
0
 
1,063
 
0
 
0
 
0
 
1,063
 Garden View Medical - St Paul, MN
8/1/2015
 
 
0
 
0
 
923
 
0
 
0
 
923
 Edina 6363 France Medical - St Paul, MN
8/6/2015
 
 
0
 
0
 
9,895
 
0
 
0
 
9,895
 2800 Medical Building - Minneapolis, MN
9/1/2015
 
 
0
 
0
 
5,253
 
0
 
0
 
5,253
 2828 Medical Building - Minneapolis, MN
9/1/2015
 
 
0
 
0
 
8,258
 
0
 
0
 
8,258
 Edina 6405 France Medical - Edina, MN
9/1/2015
 
 
0
 
0
 
8,552
 
0
 
0
 
8,552
 Ritchie Medical Plaza - St Paul, MN
9/1/2015
 
 
0
 
0
 
6,288
 
0
 
0
 
6,288
 Airport Medical – Bloomington, MN
6/1/2016
 
 
0
 
0
 
0
 
850
 
0
 
850
 Park Dental – Brooklyn Center, MN
6/1/2016
 
 
0
 
0
 
0
 
488
 
0
 
488
 Edgewood Vista – Fargo, ND
10/25/2016
 
 
0
 
0
 
0
 
12,541
 
0
 
12,541
 Sartell 2000 23rd St S – Sartell, MN
12/1/2016
 
 
0
 
0
 
0
 
2,662
 
0
 
2,662
 Billings 2300 Grant Road – Billings, MT
12/31/2016
 
 
0
 
0
 
0
 
1,499
 
0
 
1,499
 Missoula 3050 Great Northern Ave – Missoula, MT
12/31/2016
 
 
0
 
0
 
0
 
1,567
 
0
 
1,567
 Summary of Debt due after Fiscal 2017
 
 
 
0
 
0
 
0
 
0
 
174,513
 
174,513
Sub-Total Commercial Healthcare
 
 
$
5,400
$
5,746
$
39,169
$
19,607
$
174,513
$
244,435
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial Industrial
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Stone Container - Fargo, ND
12/1/2015
 
 
0
 
0
 
469
 
0
 
0
 
469
 Stone Container - Fargo, ND
12/1/2015
 
 
0
 
0
 
582
 
0
 
0
 
582
 Summary of Debt due after Fiscal 2017
 
 
 
0
 
0
 
0
 
0
 
12,909
 
12,909
Sub-Total Commercial Industrial
 
 
$
0
$
0
$
1,051
$
0
$
12,909
$
13,960






INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
LONG-TERM MORTGAGE DEBT* DETAIL AS OF JANUARY 31, 2014 (continued)
(in thousands)

Property
Maturity Date
Fiscal 2014
Fiscal 2015
Fiscal 2016
Fiscal 2017
Thereafter
Total(1)
Commercial Retail
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Omaha Barnes & Noble - Omaha, NE
6/1/2014
 
 
0
 
2,306
 
0
 
0
 
0
 
2,306
 Jamestown Buffalo Mall - Jamestown, ND
9/1/2014
 
 
0
 
222
 
0
 
0
 
0
 
222
 Fargo Express Center - Fargo, ND
10/1/2014
 
 
0
 
897
 
0
 
0
 
0
 
897
 Lakeville Strip Center - Lakeville, MN
10/1/2014
 
 
0
 
889
 
0
 
0
 
0
 
889
 Summary of Debt due after Fiscal 2017
 
 
 
0
 
0
 
0
 
0
 
22,859
 
22,859
Sub-Total Commercial Retail
 
 
$
0
$
4,314
$
0
$
0
$
22,859
$
27,173
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total
 
 
$
15,605
$
66,537
$
73,185
$
171,689
$
681,508
$
1,008,524
* Mortgage debt does not include the Company's multi-bank line of credit or construction loans. The line of credit has a maturity date of December 1, 2016; as of January 31, 2014, the Company had borrowings of $22.5 million outstanding under this line. Construction loans and other debt totaled $47.7 million as of January 31, 2014.
(1) Totals are principal balances as of January 31, 2014.
(2) Loan was paid off subsequent to January 31, 2014.
(3) Loan was renewed subsequent to January 31, 2014.
(4) Loan has anticipated payoff on April 1, 2014.
(5) Loan was refinanced subsequent to January 31, 2014.
(6) Loan is under application for renewal.








 INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
CAPITAL ANALYSIS
(in thousands, except per share and unit amounts)

 
Three Months Ended
 
1/31/2014
10/31/2013
7/31/2013
4/30/2013
1/31/2013
Equity Capitalization
 
 
 
 
 
 
 
 
 
 
Common shares outstanding
 
106,937
 
105,554
 
104,226
 
101,488
 
94,386
Operating partnership (OP) units outstanding
 
21,799
 
21,836
 
21,849
 
21,635
 
21,489
Total common shares and OP units outstanding
 
128,736
 
127,390
 
126,075
 
123,123
 
115,875
Market price per common share (closing price at end of period)
$
8.69
$
8.62
$
8.64
$
9.73
$
9.36
Equity capitalization-common shares and OP units
$
1,118,716
$
1,098,102
$
1,089,288
$
1,197,987
$
1,084,590
Recorded book value of preferred shares
$
138,674
$
138,674
$
138,674
$
138,674
$
138,674
Total equity capitalization
$
1,257,390
$
1,236,776
$
1,227,962
$
1,336,661
$
1,223,264
 
 
 
 
 
 
 
 
 
 
 
Debt Capitalization
 
 
 
 
 
 
 
 
 
 
Total debt
$
1,078,741
$
1,062,788
$
1,072,696
$
1,077,282
$
1,073,152
Total capitalization
$
2,336,131
$
2,299,564
$
2,300,658
$
2,413,943
$
2,296,416
 
 
 
 
 
 
 
 
 
 
 
Total debt to total capitalization
 
0.46:1
 
0.46:1
 
0.47:1
 
0.45:1
 
0.47:1
 
 
 
 
 
 
 
 
 
 
 


 
Nine Months Ended
Three Months Ended
 
1/31/2014
1/31/2013
1/31/2014
10/31/2013
7/31/2013
4/30/2013
1/31/2013
Earnings to fixed charges(1)
 
1.17x
 
1.24x
 
1.15x
 
1.25x
 
1.13x
 
1.48x
 
1.26x
Earnings to combined fixed charges and preferred distributions(1)
 
0.99x
 
1.10x
 
0.97x
 
1.05x
 
0.95x
 
1.25x
 
1.07x
Debt service coverage ratio(1)
 
1.54x
 
1.56x
 
1.46x
 
1.64x
 
1.54x
 
1.64x
 
1.63x
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Distribution Data
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Common shares and units outstanding at record date
 
128,004
 
115,284
 
128,004
 
126,629
 
123,976
 
116,338
 
115,284
Total common distribution paid
$
49,193
$
44,126
$
16,639
$
16,461
$
16,093
$
15,124
$
14,956
Common distribution per share and unit
$
.3900
$
.3900
$
.1300
$
.1300
$
.1300
$
.1300
$
.1300
Payout ratio (FFO per share and unit basis)(1)
 
79.6%
 
78.0%
 
76.5%
 
81.3%
 
81.3%
 
68.4%
 
81.3%
Payout ratio (AFFO per share and unit basis)(1)
 
114.7%
 
121.9%
 
118.2%
 
108.3%
 
118.2%
 
108.3%
 
130.0%

(1) See Definitions on page 30.





INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
STABILIZED PROPERTIES NET OPERATING INCOME SUMMARY
(in thousands)

 
Stabilized Properties(1)
Stabilized Properties(1)
 
Three Months Ended
January 31,
Nine Months Ended
January 31,
Segment
2014
2013
%
Change
2014
2013
%
Change
Multi-Family Residential
$
10,918
$
10,048
8.7%
$
31,733
$
31,512
0.7%
Commercial Office
 
10,357
 
9,776
5.9%
 
29,760
 
28,623
4.0%
Commercial Healthcare
 
12,905
 
11,752
9.8%
 
36,157
 
33,828
6.9%
Commercial Industrial
 
1,067
 
978
9.1%
 
3,024
 
2,673
13.1%
Commercial Retail
 
2,180
 
2,235
(2.5%)
 
6,465
 
6,422
0.7%
 
$
37,427
$
34,789
7.6%
$
107,139
$
103,058
4.0%
(1) See list of properties excluded from stabilized properties on page ii.





INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
NET OPERATING INCOME DETAIL
(in thousands)
 
Three Months Ended January 31, 2014
 
Reporting Segments
 
 
 
Multi-Family
Residential
Commercial
Office
Commercial
Healthcare
Commercial
Industrial
Commercial
Retail
Corporate and
Other
Total
Real estate rental revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stabilized(1)
$
19,352
$
19,394
$
16,969
$
1,466
$
3,448
$
0
$
60,629
Non-stabilized
 
6,496
 
0
 
273
 
198
 
33
 
0
 
7,000
Total
 
25,848
 
19,394
 
17,242
 
1,664
 
3,481
 
0
 
67,629
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Real estate expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stabilized(1)
 
8,434
 
9,037
 
4,064
 
399
 
1,268
 
0
 
23,202
Non-stabilized
 
2,564
 
0
 
56
 
94
 
11
 
0
 
2,725
Total
 
10,998
 
9,037
 
4,120
 
493
 
1,279
 
0
 
25,927
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gain on involuntary conversion
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stabilized(1)
 
0
 
0
 
0
 
0
 
0
 
0
 
0
Non-stabilized
 
1,514
 
0
 
0
 
0
 
0
 
0
 
1,514
Total
 
1,514
 
0
 
0
 
0
 
0
 
0
 
1,514
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net operating income (NOI)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stabilized(1)
 
10,918
 
10,357
 
12,905
 
1,067
 
2,180
 
0
 
37,427
Non-stabilized
 
5,446
 
0
 
217
 
104
 
22
 
0
 
5,789
Net operating income
$
16,364
$
10,357
$
13,122
$
1,171
$
2,202
$
0
$
43,216
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation of NOI to net income (loss) available to common shareholders
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Depreciation/amortization
$
(5,444)
$
(5,776)
$
(4,938)
$
(457)
$
(792)
$
(82)
$
(17,489)
Administrative, advisory and trustee fees
 
0
 
0
 
0
 
0
 
0
 
(2,662)
 
(2,662)
Impairment of real estate investments
 
0
 
0
 
0
 
0
 
0
 
(4,798)
 
(4,798)
Other expenses
 
0
 
0
 
0
 
0
 
0
 
(273)
 
(273)
Interest expense
 
(5,491)
 
(5,083)
 
(4,053)
 
(213)
 
(421)
 
131
 
(15,130)
Interest and other income
 
0
 
0
 
0
 
0
 
0
 
740
 
740
Income (loss) from continuing operations
 
5,429
 
(502)
 
4,131
 
501
 
989
 
(6,944)
 
3,604
(Loss) income from discontinued operations
 
(205)
 
0
 
0
 
861
 
(191)
 
0
 
465
Net income (loss)
 
5,224
 
(502)
 
4,131
 
1,362
 
798
 
(6,944)
 
4,069
Net income attributable to noncontrolling interests – Operating Partnership
 
0
 
0
 
0
 
0
 
0
 
(130)
 
(130)
Net income attributable to noncontrolling interests – consolidated real estate entities
 
0
 
0
 
0
 
0
 
0
 
(436)
 
(436)
Net income (loss) attributable to Investors Real Estate Trust
 
5,224
 
(502)
 
4,131
 
1,362
 
798
 
(7,510)
 
3,503
Dividends to preferred shareholders
 
0
 
0
 
0
 
0
 
0
 
(2,879)
 
(2,879)
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS
$
5,224
 
(502)
 
4,131
 
1,362
 
798
$
(10,389)
$
624
(1)
See list of properties excluded from stabilized properties on page ii.



INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
NET OPERATING INCOME DETAIL
(in thousands)
 
Three Months Ended January 31, 2013
 
Reporting Segments
 
 
 
Multi-Family
Residential
Commercial
Office
Commercial
Healthcare
Commercial
Industrial
Commercial
Retail
Corporate and
Other
Total
Real estate rental revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stabilized(1)
$
18,901
$
19,046
$
15,869
$
1,404
$
3,485
$
0
$
58,705
Non-stabilized
 
3,958
 
0
 
83
 
334
 
0
 
0
 
4,375
Total
 
22,859
 
19,046
 
15,952
 
1,738
 
3,485
 
0
 
63,080
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Real estate expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stabilized(1)
 
8,853
 
9,270
 
4,117
 
426
 
1,250
 
0
 
23,916
Non-stabilized
 
1,355
 
0
 
11
 
66
 
0
 
0
 
1,432
Total
 
10,208
 
9,270
 
4,128
 
492
 
1,250
 
0
 
25,348
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net operating income (NOI)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stabilized(1)
 
10,048
 
9,776
 
11,752
 
978
 
2,235
 
0
 
34,789
Non-stabilized
 
2,603
 
0
 
72
 
268
 
0
 
0
 
2,943
Net operating income
$
12,651
$
9,776
$
11,824
$
1,246
$
2,235
$
0
$
37,732
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation of NOI to net income (loss) available to common shareholders
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Depreciation/amortization
$
(4,541)
$
(5,250)
$
(4,451)
$
(409)
$
(762)
$
(80)
$
(15,493)
Administrative, advisory and trustee fees
 
0
 
0
 
0
 
0
 
0
 
(2,245)
 
(2,245)
Other expenses
 
0
 
0
 
0
 
0
 
0
 
(464)
 
(464)
Interest expense
 
(5,306)
 
(5,269)
 
(3,634)
 
(359)
 
(522)
 
(107)
 
(15,197)
Interest and other income
 
0
 
0
 
0
 
0
 
0
 
255
 
255
Income (loss) from continuing operations
 
2,804
 
(743)
 
3,739
 
478
 
951
 
(2,641)
 
4,588
Income (loss) from discontinued operations
 
782
 
104
 
0
 
681
 
(2)
 
0
 
1,565
Net income (loss)
 
3,586
 
(639)
 
3,739
 
1,159
 
949
 
(2,641)
 
6,153
Net income attributable to noncontrolling interests – Operating Partnership
 
0
 
0
 
0
 
0
 
0
 
(556)
 
(556)
Net income attributable to noncontrolling interests – consolidated real estate entities
 
0
 
0
 
0
 
0
 
0
 
(273)
 
(273)
Net income (loss) attributable to Investors Real Estate Trust
 
3,586
 
(639)
 
3,739
 
1,159
 
949
 
(3,470)
 
5,324
Dividends to preferred shareholders
 
0
 
0
 
0
 
0
 
0
 
(2,879)
 
(2,879)
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS
$
3,586
 
(639)
 
3,739
 
1,159
 
949
$
(6,349)
$
2,445
(1) See list of properties excluded from stabilized properties on page ii.






 INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
NET OPERATING INCOME DETAIL
(in thousands)

 
Nine Months Ended January 31, 2014
 
Reporting Segments
 
 
 
Multi-Family
Residential
Commercial
Office
Commercial
Healthcare
Commercial
Industrial
Commercial
Retail
Corporate and
Other
Total
Real estate rental revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stabilized(1)
$
57,945
$
58,075
$
48,470
$
4,218
$
10,048
$
0
$
178,756
Non-stabilized
 
17,714
 
0
 
870
 
1,055
 
104
 
0
 
19,743
Total
 
75,659
 
58,075
 
49,340
 
5,273
 
10,152
 
0
 
198,499
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Real estate expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stabilized(1)
 
26,212
 
28,315
 
12,313
 
1,194
 
3,583
 
0
 
71,617
Non-stabilized
 
6,794
 
0
 
221
 
253
 
13
 
0
 
7,281
Total
 
33,006
 
28,315
 
12,534
 
1,447
 
3,596
 
0
 
78,898
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gain on involuntary conversion
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stabilized(1)
 
0
 
0
 
0
 
0
 
0
 
0
 
0
Non-stabilized
 
2,480
 
0
 
0
 
0
 
0
 
0
 
2,480
Total
 
2,480
 
0
 
0
 
0
 
0
 
0
 
2,480
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net operating income (NOI)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stabilized(1)
 
31,733
 
29,760
 
36,157
 
3,024
 
6,465
 
0
 
107,139
Non-stabilized
 
13,400
 
0
 
649
 
802
 
91
 
0
 
14,942
Net operating income
$
45,133
$
29,760
$
36,806
$
3,826
$
6,556
$
0
$
122,081
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation of NOI to net income (loss) available to common shareholders
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Depreciation/amortization
$
(16,527)
$
(16,564)
$
(16,510)
$
(1,410)
$
(2,396)
$
(249)
$
(53,656)
Administrative, advisory and trustee services
 
0
 
0
 
0
 
0
 
0
 
(7,942)
 
(7,942)
Impairment of real estate investments
 
0
 
0
 
0
 
0
 
0
 
(4,798)
 
(4,798)
Other expenses
 
0
 
0
 
0
 
0
 
0
 
(1,630)
 
(1,630)
Interest expense
 
(16,276)
 
(15,271)
 
(11,776)
 
(768)
 
(1,406)
 
972
 
(44,525)
Interest and other income
 
0
 
0
 
0
 
0
 
0
 
1,602
 
1,602
Income (loss) from continuing operations
 
12,330
 
(2,075)
 
8,520
 
1,648
 
2,754
 
(12,045)
 
11,132
(Loss) income from discontinued operations
 
(99)
 
6,014
 
0
 
1,115
 
(580)
 
0
 
6,450
Net income (loss)
 
12,231
 
3,939
 
8,520
 
2,763
 
2,174
 
(12,045)
 
17,582
Net income attributable to noncontrolling interests – Operating Partnership
 
0
 
0
 
0
 
0
 
0
 
(1,406)
 
(1,406)
Net income attributable to noncontrolling interests – consolidated real estate entities
 
0
 
0
 
0
 
0
 
0
 
(808)
 
(808)
Net income (loss) attributable to Investors Real Estate Trust
 
12,231
 
3,939
 
8,520
 
2,763
 
2,174
 
(14,259)
 
15,368
Dividends to preferred shareholders
 
0
 
0
 
0
 
0
 
0
 
(8,636)
 
(8,636)
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS
$
12,231
$
3,939
$
8,520
$
2,763
$
2,174
$
(22,895)
$
6,732
(1)
See list of properties excluded from stabilized properties on page ii.





 INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
NET OPERATING INCOME DETAIL
(in thousands)

 
Nine Months Ended January 31, 2013
 
Reporting Segments
 
 
 
Multi-Family
Residential
Commercial
Office
Commercial
Healthcare
Commercial
Industrial
Commercial
Retail
Corporate and
Other
Total
Real estate rental revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stabilized(1)
$
56,285
$
56,214
$
46,203
$
3,815
$
9,912
$
0
$
172,429
Non-stabilized
 
10,473
 
0
 
83
 
889
 
0
 
0
 
11,445
Total
 
66,758
 
56,214
 
46,286
 
4,704
 
9,912
 
0
 
183,874
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Real estate expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stabilized(1)
 
24,773
 
27,591
 
12,375
 
1,142
 
3,490
 
0
 
69,371
Non-stabilized
 
3,511
 
0
 
12
 
208
 
0
 
0
 
3,731
Total
 
28,284
 
27,591
 
12,387
 
1,350
 
3,490
 
0
 
73,102
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gain on involuntary conversion
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stabilized(1)
 
0
 
0
 
0
 
0
 
0
 
0
 
0
Non-stabilized
 
2,263
 
0
 
0
 
0
 
0
 
0
 
2,263
Total
 
2,263
 
0
 
0
 
0
 
0
 
0
 
2,263
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net operating income (NOI)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stabilized(1)
 
31,512
 
28,623
 
33,828
 
2,673
 
6,422
 
0
 
103,058
Non-stabilized
 
9,225
 
0
 
71
 
681
 
0
 
0
 
9,977
Net operating income
$
40,737
$
28,623
$
33,899
$
3,354
$
6,422
$
0
$
113,035
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation of NOI to net income (loss) available to common shareholders
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Depreciation/amortization
$
(13,810)
$
(15,746)
$
(13,243)
$
(1,168)
$
(2,239)
$
(299)
$
(46,505)
Administrative, advisory and trustee services
 
0
 
0
 
0
 
0
 
0
 
(6,402)
 
(6,402)
Other expenses
 
0
 
0
 
0
 
0
 
0
 
(1,496)
 
(1,496)
Interest expense
 
(15,280)
 
(15,845)
 
(11,575)
 
(1,143)
 
(1,825)
 
 
(886)
 
(46,554)
Interest and other income
 
0
 
0
 
0
 
0
 
0
 
600
 
600
Income (loss) from continuing operations
 
11,647
 
(2,968)
 
9,081
 
1,043
 
2,358
 
(8,483)
 
12,678
Income (loss) from discontinued operations
 
3,689
 
248
 
(59)
 
1,557
 
46
 
0
 
5,481
Net income (loss)
 
15,336
 
(2,720)
 
9,022
 
2,600
 
2,404
 
(8,483)
 
18,159
Net income attributable to noncontrolling interests – Operating Partnership
 
0
 
0
 
0
 
0
 
0
 
(2,097)
 
(2,097)
Net income attributable to noncontrolling interests – consolidated real estate entities
 
0
 
0
 
0
 
0
 
0
 
(547)
 
(547)
Net income (loss) attributable to Investors Real Estate Trust
 
15,336
 
(2,720)
 
9,022
 
2,600
 
2,404
 
(11,127)
 
15,515
Dividends to preferred shareholders
 
0
 
0
 
0
 
0
 
0
 
(6,350)
 
(6,350)
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS
$
15,336
$
(2,720)
$
9,022
$
2,600
$
2,404
$
(17,477)
$
9,165
(1) See list of properties excluded from stabilized properties on page ii.






INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
STABILIZED PROPERTIES AND ALL PROPERTIES PHYSICAL OCCUPANCY LEVELS BY SEGMENT
3rd Quarter Fiscal 2014 vs. 3rd Quarter Fiscal 2013

Segments
Stabilized Properties
All Properties
 
3rd Quarter
3rd Quarter
3rd Quarter
3rd Quarter
 
Fiscal 2014
Fiscal 2013
Fiscal 2014
Fiscal 2013
Multi-Family Residential
93.5%
94.5%
91.8%
93.5%
Commercial Office
80.4%
78.9%
80.4%
78.9%
Commercial Healthcare
96.4%
94.9%
96.5%
94.8%
Commercial Industrial
85.6%
93.2%
86.2%
94.4%
Commercial Retail
86.9%
88.3%
86.9%
88.3%






INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
MULTI-FAMILY RESIDENTIAL SUMMARY(2)

 
Three Months Ended
 
1/31/2014
10/31/2013
7/31/2013
4/31/2013
1/31/2013
Number of Units
 
10,725
 
10,705
 
10,351
 
10,280
 
9,924
Average Investment Per Unit
 
 
 
 
 
 
 
 
 
 
Stabilized
$
61,187
$
60,592
$
60,118
$
58,765
$
58,506
Non-Stabilized
 
96,467
 
93,353
 
86,581
 
87,408
 
87,083
All Properties
$
68,728
$
67,034
$
64,743
$
63,659
$
63,107
 
 
 
 
 
 
 
 
 
 
 
Average Scheduled Rent(1) per Unit
 
 
 
 
 
 
 
 
 
 
Stabilized
$
781
$
771
$
764
$
748
$
742
Non-Stabilized
 
1,010
 
976
 
955
 
944
 
994
All Properties
$
830
$
811
$
797
$
781
$
782
 
 
 
 
 
 
 
 
 
 
 
Total Receipts per Unit
 
 
 
 
 
 
 
 
 
 
Stabilized
$
767
$
768
$
754
$
739
$
731
Non-Stabilized
 
947
 
951
 
968
 
954
 
1,004
All Properties
$
806
$
804
$
792
$
776
$
775
 
 
 
 
 
 
 
 
 
 
 
Total Recurring Capital Expenditures per Unit(1)
$
130
$
160
$
164
$
176
$
134
 
 
 
 
 
 
 
 
 
 
 
Physical Occupancy%
 
 
 
 
 
 
 
 
 
 
Stabilized
 
93.5%
 
94.6%
 
93.3%
 
94.7%
 
94.0%
Non-Stabilized
 
85.3%
 
90.4%
 
90.7%
 
94.5%
 
91.4%
All Properties
 
91.8%
 
93.8%
 
92.9%
 
94.6%
 
93.6%
 
 
 
 
 
 
 
 
 
 
 
Operating Expenses as a % of Scheduled Rent
 
 
 
 
 
 
 
 
 
 
Stabilized
 
43.0%
 
45.6%
 
46.4%
 
44.0%
 
47.3%
Non-Stabilized
 
39.8%
 
41.0%
 
40.7%
 
43.0%
 
38.7%
All Properties
 
42.2%
 
44.5%
 
45.2%
 
43.8%
 
45.5%
(1)
See Definitions on page 30.
(2)
Previously-reported amounts are not revised for discontinued operations or changes in the composition of the stabilized properties pool.





INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
COMMERCIAL LEASING SUMMARY (Stabilized Properties)

Commercial Leasing Activity
During fiscal year 2014, we have executed new and renewal commercial leases for our stabilized rental properties on 282,292 square feet for the three months ended January 31, 2014 and 1.3 million square feet for the nine months ended January 31, 2014.  As a result of our leasing efforts, occupancy in our stabilized commercial portfolio increased to 86.4% as of January 31, 2014, up from 86.3% as of January 31, 2013.
The total leasing activity for our stabilized commercial rental properties, expressed in square feet of leases signed during the period, and the resulting physical occupancy levels are as follows:
Three Months Ended January 31, 2014
 
Square Feet of
New Leases(1)
Square Feet of
Leases Renewed(1) (2)
Total
Square Feet of
Leases Executed(1)
 
Physical Occupancy
 
 
Segments
2014
2013
2014
2013
2014
2013
 
2014
2013
Office
64,288
34,280
80,424
32,055
144,712
66,335
 
80.4%
78.9%
Healthcare
175
11,656
17,734
0
17,909
11,656
 
96.4%
94.9%
Industrial
64,000
0
0
0
64,000
0
 
85.6%
93.2%
Retail
27,107
24,925
28,564
16,457
55,671
41,382
 
86.9%
88.3%
Total
155,570
70,861
126,722
48,512
282,292
119,373
 
86.4%
86.3%
(1)
The leasing activity presented is based on leases signed or executed for our stabilized rental properties during the period and is not intended to coincide with the commencement of rental revenue in accordance with GAAP.  Results include properties classified in discontinued operations; prior periods reflect amounts previously reported and exclude retroactive adjustments for properties reclassified to discontinued operations in the current period.
(2)
Leases renewed include the retained occupancy of tenants on a month-to-month basis past their original lease expiration date.
Nine Months Ended January 31, 2014
 
Square Feet of
New Leases(1)
Square Feet of
Leases Renewed(1) (2)
Total
Square Feet of
Leases Executed(1)
 
Physical Occupancy
 
 
Segments
2014
2013
2014
2013
2014
2013
 
2014
2013
Office
278,143
144,145
222,798
127,032
500,941
271,177
 
80.4%
78.9%
Healthcare
31,268
21,882
34,996
11,456
66,264
33,338
 
96.4%
94.9%
Industrial
234,403
0
251,831
9,702
486,234
9,702
 
85.6%
93.2%
Retail
124,966
64,202
78,257
55,987
203,223
120,189
 
86.9%
88.3%
Total
668,780
230,229
587,882
204,177
1,256,662
434,406
 
86.4%
86.3%
(1)
The leasing activity presented is based on leases signed or executed for our stabilized rental properties during the period and is not intended to coincide with the commencement of rental revenue in accordance with GAAP.  Results include properties classified in discontinued operations; prior periods reflect amounts previously reported and exclude retroactive adjustments for properties reclassified to discontinued operations in the current period.
(2)
Leases renewed include the retained occupancy of tenants on a month-to-month basis past their original lease expiration date.





INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
COMMERCIAL LEASING SUMMARY (Stabilized Properties)

New Leases
The following table sets forth the average effective rents and the estimated costs of tenant improvements and leasing commissions, on a per square foot basis, that we are obligated to fulfill under the new leases signed for our stabilized commercial rental properties:
Three Months Ended January 31, 2014
 
Square Feet of
New Leases(1)
Average Term
in Years
 
 
Average
 Effective Rent(2)
Estimated Tenant Improvement Cost per Square Foot(1)
Leasing
Commissions
per Square Foot(1)
 
2014
2013
2014
2013
2014
2013
2014
2013
2014
2013
Office
 
64,288
 
34,280
 
3.6
 
5.4
$
13.85
$
12.40
$
6.76
$
8.76
$
3.20
$
4.93
Healthcare
 
175
 
11,656
 
0.8
 
5.1
 
13.71
 
14.24
 
0
 
0
 
0
 
0
Industrial
 
64,000
 
0
 
2.8
 
0
 
3.03
 
0
 
0
 
0
 
0.03
 
0
Retail
 
27,107
 
24,925
 
5.4
 
5.9
 
10.94
 
13.14
 
2.89
 
23.64
 
5.61
 
1.46
Total
 
155,570
 
70,861
 
3.9
 
5.6
$
8.89
$
12.96
$
3.30
$
12.55
$
2.31
$
2.90
(1)
The leasing activity presented is based on leases signed or executed for our stabilized rental properties during the period and is not intended to coincide with the commencement of rental revenue in accordance with GAAP.  Results include properties classified in discontinued operations; prior periods reflect amounts previously reported and exclude retroactive adjustments for properties reclassified to discontinued operations in the current period. Tenant improvements and leasing commissions presented are based on square feet leased during the period. 
(2)
Effective rents represent average annual base rental payments, on a straight-line basis for the term of each lease, excluding operating expense reimbursements. The underlying leases contain various expense structures including gross, modified gross, net and triple net.
Nine Months Ended January 31, 2014
 
Square Feet of
New Leases(1)
Average Term
in Years
 
 
Average
 Effective Rent(2)
Estimated Tenant Improvement Cost per Square Foot(1)
Leasing
Commissions
per Square Foot(1)
 
2014
2013
2014
2013
2014
2013
2014
2013
2014
2013
Office
 
278,143
 
144,145
 
4.3
 
4.6
$
14.26
$
13.05
$
13.10
$
8.51
$
4.33
$
3.72
Healthcare
 
31,268
 
21,882
 
4.8
 
6.6
 
21.38
 
18.15
 
49.66
 
20.04
 
6.75
 
2.61
Industrial
 
234,403
 
0
 
3.1
 
0
 
3.55
 
0
 
0.13
 
0
 
0.50
 
0
Retail
 
124,966
 
64,202
 
5.4
 
4.9
 
5.70
 
9.41
 
1.84
 
9.89
 
4.47
 
0.84
Total
 
668,780
 
230,229
 
4.4
 
4.9
$
9.24
$
12.52
$
8.16
$
9.99
$
3.13
$
2.81
(1)
The leasing activity presented is based on leases signed or executed for our stabilized rental properties during the period and is not intended to coincide with the commencement of rental revenue in accordance with GAAP.  Results include properties classified in discontinued operations; prior periods reflect amounts previously reported and exclude retroactive adjustments for properties reclassified to discontinued operations in the current period. Tenant improvements and leasing commissions presented are based on square feet leased during the period. 
(2)
Effective rents represent average annual base rental payments, on a straight-line basis for the term of each lease, excluding operating expense reimbursements. The underlying leases contain various expense structures including gross, modified gross, net and triple net.
Our ability to maintain or increase occupancy rates is a principal driver of maintaining and increasing the average effective rents in our commercial segments. The decrease in the average effective rental rates of new leases executed in the nine months ended January 31, 2014 in our commercial retail segment when compared to new leases executed for the same period in the prior year is due to the signing of a new anchor tenant lease at our Jamestown Buffalo Mall property. In June of 2013, we executed a ten year lease with an effective date of August 1, 2013 for 84,338 square feet with a new anchor tenant at an average effective rent of $2.75 per square foot. This space was vacated by the former anchor tenant, which was paying $1.70 per square foot at the time their lease expired on May 31, 2013. Absent this transaction, the average effective rental rate for leases executed in our commercial retail segment in the nine months ended January 31, 2014 would have been $11.83 per square foot. The decrease in the average effective rental rate of new leases executed in the total commercial portfolio for the nine months ended January 31, 2014 when compared to the same period in the prior year is due primarily to the lease transaction mentioned above and the fact that there were no new commercial industrial leases executed in the nine months ended January 31, 2013. The decrease in the average effective rental rate of new leases executed in the total commercial portfolio for the three months ended January 31, 2014 when compared to the same period in the prior year is due solely to the fact that there were no new commercial industrial leases executed in the three months ended January 31, 2013.






INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
COMMERCIAL LEASING SUMMARY (Stabilized Properties)

Lease Renewals
The following table summarizes our lease renewal activity within our stabilized commercial segments (square feet data in thousands):
Three Months Ended January 31, 2014
 
Square Feet of Leases Renewed(1)
Percent of Expiring Leases Renewed(2)
Average Term
in Years
Weighted Average Growth (Decline)
 in Effective Rents(3)
Estimated
Tenant Improvement
Cost per Square Foot(1)
Leasing Commissions per Square Foot(1)
 
2014
2013
2014
2013
2014
2013
2014
2013
2014
2013
2014
2013
Office
 
80,424
 
32,055
 
44.4%
 
49.1%
 
3.2
 
1.8
 
(1.0%)
 
13.0%
$
4.54
$
0
$
1.87
$
0.54
Healthcare
 
17,734
 
0
 
100.0%
 
82.0%
 
2.3
 
0
 
9.6%
 
0%
 
0
 
0
 
0.02
 
0
Industrial
 
0
 
0
 
0%
 
53.6%
 
0
 
0
 
0%
 
0%
 
0
 
0
 
0
 
0
Retail
 
28,564
 
16,457
 
100.0%
 
60.9%
 
4.0
 
3.2
 
13.3%
 
0.8%
 
4.63
 
0.85
 
0.06
 
0.57
Total
 
126,722
 
48,512
 
55.4%
 
62.5%
 
3.3
 
2.3
 
3.6%
 
9.4%
$
3.93
$
0.29
$
1.20
$
0.55
(1)
The leasing activity presented is based on leases signed or executed for our stabilized rental properties during the period and is not intended to coincide with the commencement of rental revenue in accordance with GAAP.  Results include properties classified in discontinued operations; prior periods reflect amounts previously reported and exclude retroactive adjustments for properties reclassified to discontinued operations in the current period. Tenant improvements and leasing commissions are based on square feet leased during the period.
(2)
Renewal percentage of expiring leases is based on square footage of renewed leases and not the number of leases renewed. Expiring leases where the tenant retained occupancy on a month-to-month basis past the lease expiration date were considered to have been renewed.
(3)
Represents the percentage change in effective rent between the original leases and the renewal leases. Effective rents represent average annual base rental payments, on a straight-line basis for the term of each lease, excluding operating expense reimbursements. The underlying leases contain various expense structures including gross, modified gross, net and triple net.
Nine Months Ended January 31, 2014
 
Square Feet of Leases Renewed(1)
Percent of Expiring Leases Renewed(2)
Average Term
in Years
Weighted Average Growth (Decline)
 in Effective Rents(3)
Estimated
Tenant Improvement
Cost per Square Foot(1)
Leasing Commissions per Square Foot(1)
 
2014
2013
2014
2013
2014
2013
2014
2013
2014
2013
2014
2013
Office
 
222,798
 
127,032
 
55.5%
 
88.9%
 
3.6
 
3.2
 
(2.4%)
 
1.9%
$
4.69
$
4.66
$
3.31
$
2.48
Healthcare
 
34,996
 
11,456
 
100.0%
 
89.9%
 
3.6
 
5.3
 
8.8%
 
9.7%
 
9.96
 
11.85
 
1.10
 
2.48
Industrial
 
251,831
 
9,702
 
42.3%
 
69.4%
 
3.2
 
3.3
 
7.5%
 
(6.1%)
 
0.32
 
0.52
 
0.48
 
0.52
Retail
 
78,257
 
55,987
 
46.0%
 
68.4%
 
3.7
 
3.3
 
10.0%
 
0.4%
 
1.88
 
0.25
 
0.05
 
0.26
Total
 
587,882
 
204,177
 
53.7%
 
82.8%
 
3.6
 
3.5
 
2.7%
 
2.3%
$
2.76
$
3.66
$
1.53
$
1.78
(1)
The leasing activity presented is based on leases signed or executed for our stabilized rental properties during the period and is not intended to coincide with the commencement of rental revenue in accordance with GAAP.  Results include properties classified in discontinued operations; prior periods reflect amounts previously reported and exclude retroactive adjustments for properties reclassified to discontinued operations in the current period. Tenant improvements and leasing commissions are based on square feet leased during the period
(2)
Renewal percentage of expiring leases is based on square footage of renewed leases and not the number of leases renewed. Expiring leases where the tenant retained occupancy on a month-to-month basis past the lease expiration date were considered to have been renewed.
(3)
Represents the percentage change in effective rent between the original leases and the renewal leases. Effective rents represent average annual base rental payments, on a straight-line basis for the term of each lease, excluding operating expense reimbursements. The underlying leases contain various expense structures including gross, modified gross, net and triple net.
The decrease in the percent of expiring leases renewed in the nine months ended January 31, 2014 in our commercial retail segment when compared to the percent of expiring leases renewed for the same period in the prior year was due to the lease expiration of an anchor tenant at our Jamestown Buffalo Mall property which occupied 84,338 square feet. Although this lease expired on May 31, 2013, we were able to execute a lease with a new tenant for the entire 84,338 square feet with an effective date of August 1, 2013 that resulted in an increase in effective rent of 61.8% when compared to the rent paid by the prior tenant.  Not taking into account the previously mentioned vacated space, the percent of expiring leases renewed for our retail segment for the nine months ended January 31, 2014 would have been 87.7%.





INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
COMMERCIAL LEASING SUMMARY (Stabilized Properties)

Lease Expirations
Our ability to maintain and improve occupancy rates, and base rents, primarily depends upon our continuing ability to re-lease expiring space. The following table reflects the in-service portfolio lease expiration schedule of our consolidated commercial segments properties, including square footage and annualized base rent for expiring leases, as of January 31, 2014.
Fiscal Year of Lease Expiration
# of Leases
Square Footage of
 Expiring Leases(3)
 
Percentage of Total
 Commercial Segments
Leased Square Footage
Annualized Base
Rent of Expiring
Leases at Expiration(2)
 
Percentage of Total
 Commercial Segments
Annualized Base Rent
2014(1)
86
558,714
 
6.2%
$
6,658,548
 
5.4%
2015
128
865,562
 
9.6%
 
12,539,223
 
10.2%
2016
120
1,218,840
 
13.5%
 
17,053,103
 
13.8%
2017
116
1,183,764
 
13.1%
 
19,328,509
 
15.7%
2018
81
680,492
 
7.6%
 
11,732,667
 
9.5%
2019
77
1,285,678
 
14.3%
 
15,633,526
 
12.7%
2020
22
461,874
 
5.1%
 
4,779,779
 
3.9%
2021
33
317,115
 
3.5%
 
4,775,559
 
3.9%
2022
41
1,313,347
 
14.6%
 
16,106,939
 
13.0%
2023
12
471,436
 
5.2%
 
2,098,988
 
1.7%
Thereafter
56
662,280
 
7.3%
 
12,582,661
 
10.2%
Totals
772
9,019,102
 
100.0%
$
123,289,502
 
100.0%
(1)
Includes month-to-month leases. As of January 31, 2014 month-to-month leases accounted for 416,107 square feet.
(2)
Annualized Base Rent is monthly scheduled rent as of January 1, 2014, multiplied by 12.
(3)
Assuming that none of the tenants exercise renewal or termination options, and including leases renewed prior to expiration. Also excludes 98,174 square feet of income producing real estate operated within a Taxable REIT Subsidiary.
Information on current market rents can be difficult to obtain, is highly subjective, and is often not directly comparable between properties. Accordingly, we believe the average effective rent realized on new leases and the increase or decrease in effective rent of lease renewals, as previously defined, are the most objective and meaningful performance measurements of our leasing activity.







INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
10 LARGEST COMMERCIAL TENANTS – BASED ON ANNUALIZED BASE RENT(1)
as of January 31, 2014

Tenant
Number of
Properties
Average
Remaining
Lease Term
in Months
% of Total
Commercial
Segments'
Minimum
Rents
Aggregate
Rentable
Square Feet
% of Aggregate
Occupied
Square
Feet
Affiliates of Edgewood Vista
32
76
13.9%
1,481,647
16.3%
St. Luke's Hospital of Duluth, Inc.
6
26
3.7%
198,775
2.2%
Fairview Health Services
9
42
3.6%
247,019
2.7%
Applied Underwriters
3
37
2.4%
141,724
1.6%
HealthEast Care System
1
61
1.6%
114,316
1.3%
Affiliates of Siemens USA (NYSE: SI)
2
38
1.4%
112,848
1.2%
Microsoft (NASDAQ: MSFT)
1
59
1.3%
122,040
1.3%
Arcadis Corporate Services, Inc.
1
30
1.3%
71,430
0.8%
Nebraska Orthopaedic Hospital
1
182
1.3%
61,758
0.7%
State of Idaho Department of Health and Welfare
2
49
1.2%
103,342
1.1%
Total/Weighted Average
 
56
31.7%
2,654,899
29.2%
(1) See Definitions on page 30.





INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
COMMERCIAL LEASE EXPIRATIONS
as of January 31, 2014

 
(dollars in thousands except average rental rates)
Fiscal Year
Number of
Leases
Rentable
Square Feet(1)
% of Rentable
Square Feet
Annualized
Rent(2)
Average
Rental
Rate
% of
Annualized
Base Rent
Commercial Office
 
 
 
 
 
 
 
 
2014(3)
38
141,817
4.0%
$
1,782
$
12.56
3.3%
2015
67
400,294
11.3%
 
7,299
 
18.23
13.5%
2016
53
553,632
15.7%
 
8,674
 
15.67
16.0%
2017
56
814,561
23.1%
 
14,228
 
17.47
26.3%
2018
39
454,638
12.9%
 
6,857
 
15.08
12.7%
2019 and thereafter
84
1,165,857
33.0%
 
15,258
 
13.09
28.2%
 
337
3,530,799
100.0%
$
54,098
$
15.32
100.0%
 
 
 
 
 
 
 
 
 
Commercial Healthcare
 
 
 
 
 
 
 
 
2014(4)
27
376,645
11.4%
$
4,557
$
12.10
8.4%
2015
19
106,178
3.2%
 
2,829
 
26.64
5.2%
2016
27
272,348
8.3%
 
5,272
 
19.36
9.7%
2017
31
164,655
5.0%
 
3,411
 
20.72
6.3%
2018
23
185,262
5.6%
 
4,357
 
23.52
8.0%
2019 and thereafter
107
2,195,880
66.5%
 
33,760
 
15.37
62.4%
 
234
3,300,968
100.0%
$
54,186
$
16.42
100.0%
 
 
 
 
 
 
 
 
 
Commercial Industrial
 
 
 
 
 
 
 
 
2014(5)
0
0
0.0%
$
0
$
0.00
0.0%
2015
1
30,000
2.8%
 
105
 
3.50
2.1%
2016
5
265,848
25.3%
 
1,608
 
6.05
31.5%
2017
1
69,600
6.7%
 
357
 
5.12
7.0%
2018
0
0
0.0%
 
0
 
0.00
0.0%
2019 and thereafter
9
684,663
65.2%
 
3,027
 
4.42
59.4%
 
16
1,050,111
100.0%
$
5,097
$
4.85
100.0%
 
 
 
 
 
 
 
 
 
Commercial Retail
 
 
 
 
 
 
 
 
2014(6)
21
40,252
3.5%
$
319
$
7.93
3.2%
2015
41
329,090
28.9%
 
2,306
 
7.01
23.3%
2016
35
127,012
11.2%
 
1,499
 
11.80
15.1%
2017
28
134,948
11.9%
 
1,333
 
9.88
13.5%
2018
19
40,592
3.6%
 
519
 
12.77
5.2%
2019 and thereafter
41
465,330
40.9%
 
3,932
 
8.45
39.7%
 
185
1,137,224
100.0%
$
9,908
$
8.71
100.0%
 
 
 
 
 
 
 
 
 
Commercial Total
 
 
 
 
 
 
 
 
2014(7)
86
558,714
6.2%
$
6,658
$
11.92
5.4%
2015
128
865,562
9.6%
 
12,539
 
14.49
10.2%
2016
120
1,218,840
13.5%
 
17,053
 
13.99
13.8%
2017
116
1,183,764
13.1%
 
19,329
 
16.33
15.7%
2018
81
680,492
7.6%
 
11,733
 
17.24
9.5%
2019 and thereafter
241
4,511,730
50.0%
 
55,977
 
12.41
45.4%
 
772
9,019,102
100.0%
$
123,289
$
13.67
100.0%

(1) Excludes 98,174 square feet of income producing real estate operated within a Taxable REIT Subsidiary.
(2) Annualized Base Rent is monthly scheduled rent as of January 1, 2014 (cash basis), multiplied by 12.
(3) Includes month-to-month leases.  As of January 31, 2014 month-to-month leases accounted for 73,796 square feet.
(4) Includes month-to-month leases.  As of January 31, 2014 month-to-month leases accounted for 319,380 square feet.
(5) The Commercial Industrial segment has no month-to-month leases in place as of January 31, 2014.
(6) Includes month-to-month leases.  As of January 31, 2014 month-to-month leases accounted for 22,931 square feet.
(7) Includes month-to-month leases.  As of January 31, 2014 month-to-month leases accounted for 416,107 square feet.





INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
FISCAL 2014 ACQUISITION SUMMARY
as of January 31, 2014
(dollars in thousands)

Property
 
Location
 
Segment Type
 
Acquisition
Date
Square
Feet/Units
Leased
Percentage
At
Acquisition
January 31,
2014 Leased
Percentage
Acquisition
Cost
 
 
 
 
 
 
 
 
 
 
 
 
Alps Park
 
Rapid City, SD
 
Multi-Family Residential
 
May 1, 2013
71
97.2%
100.0%
$
6,200
Chateau II
 
Minot, ND
 
Unimproved Land
 
May 21, 2013
n/a
n/a
n/a
 
179
Jamestown Unimproved
 
Jamestown, ND
 
Unimproved Land
 
August 9, 2013
n/a
n/a
n/a
 
700
RED 20(1)
 
Minneapolis, MN
 
Unimproved Land
 
August 20, 2013
n/a
n/a
n/a
 
1,900
Landing at Southgate(2)
 
Minot, ND
 
Multi-Family Residential
 
September 4, 2013
108
77.8%
92.6%
 
8,809
Southpoint
 
Grand Forks, ND
 
Multi-Family Residential
 
September 5, 2013
96
100.0%
96.9%
 
10,600
Pinecone Villas
 
Sartell, MN
 
Multi-Family Residential
 
October 31, 2013
24
83.3%
87.5%
 
2,800
Legends at Heritage Place
 
Sartell, MN
 
Commercial Healthcare and Unimproved Land
 
October 31, 2013
98,174
100.0%
100.0%
 
12,400
Cypress Court(3)
 
St. Cloud, MN
 
Multi-Family Residential
 
November 1, 2013
132
59.1%
66.7%
 
7,836
River Ridge(4)
 
Bismarck, ND
 
Multi-Family Residential
 
December 2, 2103
146
81.5%
81.5%
 
14,703
Spring Creek Fruitland
 
Fruitland, ID
 
Unimproved Land
 
January 21, 2014
n/a
n/a
n/a
 
335
 
 
 
 
 
 
Total Square Feet
98,174
 
 
$
66,462
 
 
 
 
 
 
Total Units
577
 
 
 
 

(1)
The Company is an approximately 58.6% partner in the joint venture entity constructing this property; the anticipated total cost amount given is the total cost to the joint venture entity.
(2)
Development property placed in service September 4, 2013. Additional costs paid in fiscal year 2013 totaled $6.3 million, for a total project cost at January 31, 2014 of $15.1 million. The project is owned by a joint venture entity in which the Company has an approximately 51% interest.
(3)
Development property placed in service November 1, 2013. Additional costs paid in fiscal year 2013 totaled $5.8 million, for a total project cost at January 31, 2014 of $13.6 million. The project is owned by a joint venture entity in which the Company has an approximately 86% interest.
(4)
Development property placed in service December 2, 2013. Additional costs paid in fiscal year 2013 totaled $10.1 million, including land acquired in fiscal year 2009, for a total project cost at January 31, 2014 of $24.8 million.






INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
FISCAL 2014 DEVELOPMENT IN PROGESS SUMMARY
as of January 31, 2014
(dollars in thousands)

Property and Location
Planned
Segment
Total Rentable
Square Feet
or # of Units
Percentage
Leased
or Committed
Anticipated
Total
Cost
Cost to
Date
Anticipated
Construction
Completion
Dakota Commons  - Williston, ND
Multi-Family Residential
44 units
0%
$
10,736
$
6,139
1st Quarter Fiscal 2015
Commons at Southgate - Minot, ND(1)
Multi-Family Residential
233 units
0%
 
37,201
 
23,492
2nd Quarter Fiscal 2015
Renaissance Heights I - Williston, ND(2)
Multi-Family Residential
288 units
8.6%
 
62,362
 
33,934
2nd Quarter Fiscal 2015
Arcata - Golden Valley, MN
Multi-Family Residential
165 units
0%
 
33,151
 
9,250
2nd Quarter Fiscal 2015
RED 20 - Minneapolis, MN(3)
Multi-Family Residential and Commercial
130 units and 10,625 sq ft
0%
 
29,462
 
9,333
2nd Quarter Fiscal 2015
Chateau II - Minot, ND(4)
Multi-Family Residential
72 units
0%
 
14,711
 
1,741
4th Quarter Fiscal 2015
Cardinal Point - Grand Forks, ND
Multi-Family Residential
251 units
0%
 
40,042
 
4,986
4th Quarter Fiscal 2015
Other
n/a
n/a
n/a
 
n/a
 
211
n/a
 
 
 
 
$
227,665
$
89,086
 
(1)
The Company is a 51% partner in the joint venture entity constructing this property; the anticipated total cost amount given is the total cost to the joint venture entity.
(2)
The Company is a 70% partner in the joint venture entity constructing this property; the anticipated total cost amount given is the total cost to the joint venture entity.
(3)
The Company is an approximately 58.6% partner in the joint venture entity constructing this property; the anticipated total cost amount given is the total cost to the joint venture entity.
(4)
On December 5, 2013, this development project was destroyed by fire.





Definitions
January 31, 2014
Adjusted funds from operations (AFFO) is calculated by subtracting from Funds from operations (FFO) (1) tenant improvements and leasing costs at stabilized properties, and recurring capital expenditures that are capitalized and amortized and are necessary to maintain our properties and revenue stream and (2) straight line rents, then adding (3) non-real estate depreciation and amortization. We may also subtract from FFO certain unusual non-recurring items that do not produce cash available for distribution to shareholders. Our calculation subtracts from FFO leasing commissions and tenant improvements at stabilized properties only, since we consider tenant improvement and leasing cost levels at non-stabilized properties unrepresentative of expected levels at stabilized properties. Previously-reported AFFO amounts are not revised for changes in the composition of the stabilized properties pool. AFFO is included herein because we consider it to be a measure of a REIT's ability to incur and service debt and to pay distributions to its shareholders. AFFO is a non-GAAP and non-standardized measure, and may be calculated differently by other REITs.
Annualized base rent (ABR) is calculated as monthly base rent (cash basis) per the lease, as of the reporting period, multiplied by 12.
Debt to total market capitalization is total debt from the balance sheet divided by the sum of total debt from the balance sheet plus the market value of shares outstanding at the end of the period.
Debt service coverage ratio is computed by dividing earnings before interest income and expense, depreciation, amortization and gain on sale of real estate by interest expense and principal amortization.
EBITDA is earnings before interest, taxes, depreciation and amortization. We consider EBITDA to be an appropriate supplemental performance measure because it eliminates depreciation, interest and the gain/loss from property dispositions, which permits investors to view income from operations without the effect of non-cash depreciation or the cost of debt; however, EBIDTA as we calculate it has not been adjusted for the effect of nonrecurring events such as asset impairment and gain/loss on involuntary conversion. EBITDA is a non-GAAP measure. EBITDA as calculated by us is not comparable to EBITDA reported by other REITs that do not define EBITDA exactly as we do.
Funds from operations (FFO) - The National Association of Real Estate Investment Trusts, Inc. (NAREIT) defines FFO as "net income (computed in accordance with generally accepted accounting principles, excluding gains (or losses) from sales of property, plus real estate depreciation and amortization, and adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures will be calculated to reflect funds from operations on the same basis." In addition, in October 2011 NAREIT clarified its computation of FFO to exclude impairment charges for all periods presented. FFO is a non-GAAP measure.  We consider FFO, which is a standard supplemental measure for equity real estate investment trusts, helpful to investors because it facilitates an understanding of the operating performance of properties without giving effect to impairment write-downs and to real estate depreciation and amortization, which assumes that the value of real estate assets diminishes predictably over time.  Since real estate values instead historically rise or fall with market conditions, we believe that FFO provides investors and management with a more accurate indication of our financial and operating results.
Net Operating Income (NOI) is total real estate revenues and gain on involuntary conversion less real estate expenses (which consist of utilities, maintenance, real estate taxes, insurance and property management expenses).  We believe that NOI is an important supplemental measure of operating performance for a REIT's operating real estate because it provides a measure of core operations that is unaffected by depreciation, amortization, financing and general and administrative expense. NOI does not represent cash generated by operating activities in accordance with GAAP and should not be considered an alternative to net income, net income available for common shareholders or cash flow from operating activities as a measure of financial performance.
Payout ratio (FFO per share and unit basis) - The ratio of the current quarterly or annual distribution rate per common share and unit divided by quarterly or annual FFO per share and unit.
Ratio of earnings to fixed charges - The ratio of earnings to fixed charges is computed by dividing earnings by fixed charges. For this purpose, earnings consist of income from continuing operations plus fixed charges and preferred distributions, less adjustments for noncontrolling interests - consolidated real estate entities, capitalized interest and preferred distributions. Fixed charges consist of mortgage and loan interest expense, whether expensed or capitalized, the amortization of debt expense and capitalized interest.
Ratio of earnings to combined fixed charges and preferred distributions - The ratio of earnings to combined fixed charges and preferred distributions is computed by dividing earnings by combined fixed charges and preferred distributions. For this purpose, earnings consist of income from continuing operations plus fixed charges and preferred distributions, less adjustments for noncontrolling interests - consolidated real estate entities, capitalized interest and preferred distributions. Combined fixed charges and preferred distributions consist of fixed charges (mortgage and loan interest expense, whether expensed or capitalized, the amortization of debt expense and capitalized interest) and preferred distributions.
Recurring capital expenditures are expenditures (excluding capital expenditures recoverable from tenants and capital expenditures at properties sold during the period) made on a regular or recurring basis to maintain a property's competitive position within its market, generally with a depreciable life of 5 to 12 years, but excluding (a) capital expenditures made in the year of acquisition and in subsequent periods until the property is stabilized (i.e., excluding capital expenditures on non-stabilized properties), (b) improvements associated with the expansion or re-development of a building, (c) renovations to a building which change the underlying classification of the building (for example, from industrial to office or Class C office to Class A office) or (d) capital improvements that represent the addition of something new to a property, rather than the replacement of an existing item.
Scheduled rent revenue is the total possible revenue from all leasable units and square footage, with occupied space valued at contract rates pursuant to leases and vacant units or square footage at market rates.
Stabilized properties are properties owned or in service for the entirety of the periods being compared, and, in the case of development or re-development properties, which have achieved a target level of occupancy of 90% for multi-family residential properties and 85% for commercial office, healthcare, industrial and retail properties.

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