EX-99.2 3 iretexhibit992-09092014.htm CERTAIN SUPPLEMENTAL INFORMATION NOT INCLUDED IN THE EARNINGS RELEASE

Exhibit 99.2



First Quarter Fiscal 2015
Supplemental Operating and Financial Data
for the Quarter Ended July 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
Table of Contents
July 31, 2014

 
Page
 
 
Company Background and Highlights                                                                                                                                                                                                          
2
 
 
Property Cost by Segment and by State                                                                                                                                                                                                          
5
 
 
Key Financial Data
 
Condensed Consolidated Balance Sheets                                                                                                                                                                                                  
6
Condensed Consolidated Statements of Operations                                                                                                                                                                                                  
7
Funds From Operations                                                                                                                                                                                                  
8
Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (Adjusted EBITDA)
9
 
 
Capital Analysis
 
Long-Term Mortgage Debt Analysis                                                                                                                                                                                                  
10
Long-Term Mortgage Debt Detail                                                                                                                                                                                                  
11-13
Capital Analysis                                                                                                                                                                                                  
14
 
 
Portfolio Analysis
 
Same-Store Properties Net Operating Income Summary                                                                                                                                                                                                  
15
Net Operating Income Detail                                                                                                                                                                                                  
16-17
Same-Store Properties and Overall Occupancy Levels by Segment                                                                                                                                                                                                  
18
 
 
Tenant Analysis
 
Multi-Family Residential Summary                                                                                                                                                                                                  
19
Commercial Leasing Summary                                                                                                                                                                                                  
20-22
10 Largest Commercial Tenants - Based on Annualized Base Rent                                                                                                                                                                                                  
23
Commercial Lease Expirations                                                                                                                                                                                                  
24
 
 
Growth and Strategy
 
Acquisition Summary                                                                                                                                                                                                  
25
Development Placed in Service Summary                                                                                                                                                                                                  
26
Development in Progress Summary                                                                                                                                                                                                  
27
 
 
Definitions                                                                                                                                                                                                        
28
 




Company Background and Highlights
First Quarter Fiscal 2015
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 first quarter of fiscal year 2015, the Company closed on its acquisitions of:
·
a 152-unit multi-family residential property in Rapid City, South Dakota, on approximately 10.0 acres of land, for a purchase price of $15.0 million, of which $9.9 million consisted of the assumption of existing debt, with the remainder paid in cash;
·
a 52-unit multi-family residential property in Rapid City, South Dakota, on approximately 2.0 acres of land, for a purchase price of $3.3 million, of which $2.3 million consisted of the assumption of existing debt, with the remainder paid in cash;
·
an approximately 35-acre parcel of vacant land in Bismarck, North Dakota, acquired for possible future development, for a purchase price of $4.3 million, paid in cash;
·
an approximately 10.5-acre parcel of vacant land in Brooklyn Park, Minnesota, acquired for development as the PrairieCare Medical project, for a purchase price of $2.6 million, paid in cash; and
·
an approximately 55.3% interest in a joint venture entity currently constructing the 71 France Phase I project in Edina, Minnesota, a 109-unit multi-family residential property.
Also during the first quarter of fiscal year 2015, the Company placed in service the Company's 44-unit Dakota Commons multi-family residential property in Williston, North Dakota, and 54 units of the approximately 288-unit Renaissance Heights multi-family residential property in Williston, North Dakota, in which the Company has an approximately 70% interest.
During the first quarter of fiscal year 2015, the Company sold one commercial office property and one commercial industrial property for a total sales price of $6.7 million. The Company also demolished a building at a commercial retail property in Weston, Wisconsin.
During the first quarter of fiscal year 2015, continued high occupancy levels in the Company's multi-family residential portfolio allowed the Company to implement selected rent increases, and the multi-family residential development projects placed in service (the Company's 44-unit Dakota Commons property in Williston, North Dakota, and 54 units in the approximately 288-unit Renaissance Heights property in Williston, North Dakota, in which the Company has an approximately 70% interest) experienced strong initial demand. Dakota Commons was 40.9% leased as of July 31, 2014, and 67 of the 108 completed Renaissance Heights units were leased as of July 31, 2014. The Company expects to see continued favorable results in this segment in the remainder of fiscal year 2015; however, the Company's ability to maintain occupancy levels and selectively raise rents remains dependent on continued healthy employment and wage growth. The Company also continues to observe considerable multi-family development activity in the Company's markets, and as this new construction is completed and leased, the Company will experience increased competition for tenants.
The Company's commercial office segment, mostly concentrated in Minnesota, continued to be affected by a number of adverse macro conditions, including real wage growth that remains mostly stagnant.  Although overall employment levels in the office sector are 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. The Company expects this erosion in demand for office space to continue, which we expect will impede increases on rental rates in our commercial office portfolio. As a result, although the Company has experienced some modest growth in occupancy levels during the first quarter of fiscal year 2015 compared to the first quarter of fiscal year 2014, the Company continues to expect a slow and uneven recovery in its office segment.
The Company's healthcare segment consists of medical office properties and senior housing facilities. The medical office sector remains stable with modest increases in both occupancy and rents. The Company's senior housing assets continue to benefit from the strengthening 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.
Both the retail and industrial property markets continue to show signs of revival. In the industrial segment, a relative lack of new supply is leading to vacant industrial space being absorbed, with industrial rents in certain markets rising slightly to reflect this lack of new supply, and tenant concessions dissipating.
The Company plans to continue in the remainder of fiscal year 2015 its selective disposition of assets in non-core markets, particularly office and retail segment assets, and intends to use the proceeds from these dispositions to continue portfolio deleveraging and for developing and acquiring high-quality assets in the Company's multi-family and healthcare segments.
In the first quarter of fiscal year 2015, IRET paid its 173rd consecutive quarterly distribution. The $0.1300 per share/unit distribution was payable on July 1, 2014. Subsequent to the end of the first quarter of fiscal year 2015, on September 3, 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 October 1, 2014 to common shareholders and unitholders of record on September 15, 2014. Also on September 3, 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 September 30, 2014 to Series A preferred shareholders of record on September 15, 2014, and declared a distribution of $0.4968 per share on the Company's Series B preferred shares of beneficial interest, payable September 30, 2014 to Series B preferred shareholders of record on September 15, 2014.
As of July 31, 2014, IRET owns a diversified portfolio of 259 properties consisting of 96 multi-family residential properties, 64 commercial office properties, 67 commercial healthcare properties (including senior housing), 7 commercial industrial properties and 25 commercial retail properties.  IRET's common shares are publicly traded on the New York Stock Exchange (NYSE: IRET).





Company Snapshot
(as of July 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                                                                                              
259
Total Square Feet
 
(commercial properties)                                                                                          
10.2 million
Total Units
 
(multi-family residential properties)                                                                                          
11,080
Common Shares Outstanding (thousands)                                                                                              
114,763
Limited Partnership Units Outstanding (thousands)
17,975
Common Share Distribution - Quarter/Annualized
$0.13/$0.52
Dividend Yield                                                                                              
6.1%
Total Capitalization (see p.14 for detail)                                                                                              
$2.4 billion


Investor Information
(as of July 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)
 
1st Quarter
Fiscal Year 2015
4th Quarter
Fiscal Year 2014
3rd Quarter
Fiscal Year 2014
2nd Quarter
Fiscal Year 2014
1st Quarter
Fiscal Year 2014
High Closing Price
$
9.21
$
9.06
$
8.94
$
9.03
$
9.77
Low Closing Price
$
8.52
$
8.34
$
8.24
$
8.05
$
8.09
Average Closing Price
$
8.82
$
8.71
$
8.58
$
8.41
$
9.03
Closing Price at end of quarter
$
8.52
$
8.72
$
8.69
$
8.62
$
8.64
Common Share Distributions—annualized
$
0.520
$
0.520
$
0.520
$
0.520
$
0.520
Closing Dividend Yield - annualized
 
6.1%
 
6.0%
 
6.0%
 
6.0%
 
6.0%
Closing common shares outstanding (thousands)
 
114,763
 
109,019
 
106,937
 
105,554
 
104,226
Closing limited partnership units outstanding (thousands)
 
17,975
 
21,094
 
21,799
 
21,836
 
21,849
Closing market value of outstanding common shares, plus imputed closing market value of outstanding limited partnership units (thousands)
$
1,130,928
$
1,134,585
$
1,118,716
$
1,098,102
$
1,089,288


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 2014 Form 10-K. We assume no obligation to update or supplement forward-looking statements that become untrue because of subsequent events.
First Quarter Fiscal 2015 Developments in Progress
 
 
 
 
Commons At Southgate
1909 31th Ave. SW
Minot, ND 58701
Cypress Court II
906 Cypress Road
St. Cloud, MN 56303
 
 
 
 
Red 20
514 1st Ave. NE
Minneapolis, MN 55403
Renaissance Heights I
4615 11th Ave. W
Williston, ND 58801





First Quarter Fiscal 2015

 
Percentage of Total Property Cost by State



                              





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

 
7/31/2014
4/30/2014
1/31/2014
10/31/2013
7/31/2013
ASSETS
 
 
 
 
 
 
 
 
 
 
Real estate investments
 
 
 
 
 
 
 
 
 
 
Property owned
$
2,025,327
$
1,996,031
$
2,042,290
$
2,032,747
$
2,016,523
Less accumulated depreciation
 
(435,317)
 
(424,288)
 
(439,233)
 
(431,318)
 
(429,376)
 
 
1,590,010
 
1,571,743
 
1,603,057
 
1,601,429
 
1,587,147
Development in progress
 
131,862
 
104,609
 
89,086
 
90,052
 
77,396
Unimproved land
 
24,772
 
22,864
 
21,498
 
21,619
 
20,774
Total real estate investments
 
1,746,644
 
1,699,216
 
1,713,641
 
1,713,100
 
1,685,317
Real estate held for sale
 
6,508
 
2,951
 
0
 
2,620
 
3,969
Cash and cash equivalents
 
60,620
 
47,267
 
53,494
 
68,727
 
93,193
Other investments
 
329
 
329
 
643
 
642
 
640
Receivable arising from straight-lining of rents, net of allowance
 
27,286
 
27,096
 
27,026
 
26,336
 
26,671
Accounts receivable, net of allowance
 
7,013
 
10,206
 
15,540
 
6,541
 
8,370
Real estate deposits
 
3,741
 
145
 
3,502
 
230
 
489
Prepaid and other assets
 
3,428
 
4,639
 
8,197
 
7,605
 
4,741
Intangible assets, net of accumulated amortization
 
31,478
 
32,639
 
34,008
 
35,625
 
36,989
Tax, insurance, and other escrow
 
20,451
 
20,880
 
24,550
 
11,864
 
12,344
Property and equipment, net of accumulated depreciation
 
1,641
 
1,681
 
1,719
 
1,191
 
1,217
Goodwill
 
1,951
 
1,100
 
1,100
 
1,100
 
1,100
Deferred charges and leasing costs, net of accumulated amortization
 
20,677
 
21,072
 
21,138
 
20,666
 
21,602
TOTAL ASSETS
$
1,931,767
$
1,869,221
$
1,904,558
$
1,896,247
$
1,896,642
 
 
 
 
 
 
 
 
 
 
 
LIABILITIES AND EQUITY
 
 
 
 
 
 
 
 
 
 
LIABILITIES
 
 
 
 
 
 
 
 
 
 
Accounts payable and accrued expenses
$
62,517
$
59,105
$
54,337
$
57,453
$
52,563
Revolving line of credit
 
35,500
 
22,500
 
22,500
 
10,000
 
10,000
Mortgages payable
 
1,017,574
 
997,689
 
1,008,524
 
1,021,170
 
1,030,407
Other
 
83,666
 
63,178
 
47,767
 
31,689
 
32,366
TOTAL LIABILITIES
 
1,199,257
 
1,142,472
 
1,133,128
 
1,120,312
 
1,125,336
 
 
 
 
 
 
 
 
 
 
 
REDEEMABLE NONCONTROLLING INTERESTS – CONSOLIDATED REAL ESTATE ENTITIES
 
6,313
 
6,203
 
6,113
 
6,044
 
5,949
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
 
884,415
 
843,268
 
829,816
 
818,516
 
807,928
Accumulated distributions in excess of net income
 
(407,052)
 
(389,758)
 
(344,294)
 
(331,116)
 
(323,406)
Total Investors Real Estate Trust shareholders' equity
 
616,037
 
592,184
 
624,196
 
626,074
 
623,196
Noncontrolling interests – Operating Partnership
 
84,250
 
105,724
 
117,803
 
120,678
 
122,334
Noncontrolling interests – consolidated real estate entities
 
25,910
 
22,638
 
23,318
 
23,139
 
19,827
Total equity
 
726,197
 
720,546
 
765,317
 
769,891
 
765,357
TOTAL LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
$
1,931,767
$
1,869,221
$
1,904,558
$
1,896,247
$
1,896,642






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

 
Three Months Ended
OPERATING RESULTS
7/31/2014
4/30/2014
1/31/2014
10/31/2013
7/31/2013
Real estate revenue
$
67,837
$
66,983
$
67,629
$
65,772
$
65,098
Real estate expenses
 
27,518
 
29,589
 
25,927
 
26,331
 
26,640
Gain on involuntary conversion
 
0
 
0
 
1,514
 
0
 
966
Net operating income
 
40,319
 
37,394
 
43,216
 
39,441
 
39,424
TRS senior housing revenue
 
793
 
0
 
0
 
0
 
0
TRS senior housing expenses
 
(693)
 
0
 
0
 
0
 
0
Depreciation/amortization
 
(17,056)
 
(17,262)
 
(17,489)
 
(17,167)
 
(19,000)
Administrative expenses, advisory and trustee services
 
(3,664)
 
(2,801)
 
(2,662)
 
(2,527)
 
(2,753)
Other expenses
 
(612)
 
(502)
 
(273)
 
(678)
 
(679)
Impairment of real estate investments
 
(2,320)
 
(37,768)
 
(4,798)
 
0
 
0
Interest expense
 
(14,664)
 
(14,617)
 
(15,130)
 
(14,799)
 
(14,596)
Interest and other income
 
691
 
1,085
 
740
 
652
 
210
(Loss) income before loss on sale of real estate and other investments and income from discontinued operations
 
2,794
 
(34,471)
 
3,604
 
4,922
 
2,606
Loss on sale of real estate and other investments
 
(2,993)
 
(51)
 
0
 
0
 
0
(Loss) income from continuing operations
 
(199)
 
(34,522)
 
3,604
 
4,922
 
2,606
Income from discontinued operations
 
0
 
0
 
465
 
5,375
 
610
Net (loss) income
$
(199)
$
(34,522)
$
4,069
$
10,297
$
3,216
 
 
 
 
 
 
 
 
 
 
 
Net loss (income) attributable to noncontrolling interest – Operating Partnership
 
402
 
6,082
 
(130)
 
(1,226)
 
(50)
Net income attributable to noncontrolling interests – consolidated real estate entities
 
(354)
 
(102)
 
(436)
 
(284)
 
(88)
Net (loss) income attributable to Investors Real Estate Trust
 
(151)
 
(28,542)
 
3,503
 
8,787
 
3,078
Dividends to preferred shareholders
 
(2,879)
 
(2,878)
 
(2,879)
 
(2,878)
 
(2,879)
NET (LOSS) INCOME AVAILABLE TO COMMON SHAREHOLDERS
$
(3,030)
$
(31,420)
$
624
$
5,909
$
199
 
 
 
 
 
 
 
 
 
 
 
Per Share Data
 
 
 
 
 
 
 
 
 
 
Earnings (loss) per common share from continuing operations – Investors Real Estate Trust – basic & diluted
$
(.03)
$
(.29)
$
.00
$
.01
$
.00
Earnings per common share from discontinued operations – Investors Real Estate Trust – basic & diluted
 
.00
 
.00
 
.00
 
.05
 
.00
Net income per common share – basic & diluted
$
(.03)
$
(.29)
$
.00
$
.06
$
.00
 
 
 
 
 
 
 
 
 
 
 
Percentage of Revenues
 
 
 
 
 
 
 
 
 
 
Real estate expenses
 
41.1%
 
44.2%
 
38.3%
 
40.0%
 
40.9%
Depreciation/amortization
 
24.9%
 
25.8%
 
25.9%
 
26.1%
 
29.2%
General and administrative
 
5.3%
 
4.2%
 
3.9%
 
3.8%
 
4.2%
Interest
 
21.4%
 
21.8%
 
22.4%
 
22.5%
 
22.4%
Income from discontinued operations
 
0.0%
 
0.0%
 
0.7%
 
8.2%
 
0.9%
Net (loss) income
 
(0.3)%
 
(51.5)%
 
6.0%
 
15.7%
 
4.9%
 
 
 
 
 
 
 
 
 
 
 
Ratios
 
 
 
 
 
 
 
 
 
 
Adjusted EBITDA(1)/Interest expense
 
2.29x
 
2.26x
 
2.13x
 
2.37x
 
2.23x
Adjusted EBITDA(1)/Interest expense plus preferred distributions
 
1.94x
 
1.90x
 
1.81x
 
2.00x
 
1.88x

 
(1) See Definitions on page 28.  Adjusted EBITDA is a non-GAAP measure; see page 9 for a reconciliation of Adjusted EBITDA to net income.





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

 
Three Months Ended
 
7/31/2014
4/30/2014
1/31/2014
10/31/2013
7/31/2013
Funds From Operations(1)
 
 
 
 
 
 
 
 
 
 
Net (loss) income attributable to Investors Real Estate Trust
$
(151)
$
(28,542)
$
3,503
$
8,787
$
3,078
Less dividends to preferred shareholders
 
(2,879)
 
(2,878)
 
(2,879)
 
(2,878)
 
(2,879)
Net (loss) income available to common shareholders
 
(3,030)
 
(31,420)
 
624
 
5,909
 
199
Adjustments:
 
 
 
 
 
 
 
 
 
 
Noncontrolling interests – Operating Partnership
 
(402)
 
(6,082)
 
130
 
1,226
 
50
Depreciation and amortization
 
17,037
 
17,239
 
17,546
 
17,490
 
19,555
Impairment of real estate investments
 
2,320
 
37,768
 
4,798
 
57
 
1,803
(Loss) gain on depreciable property sales
 
2,993
 
51
 
(358)
 
(4,698)
 
(1,943)
Funds from operations applicable to common shares and Units
$
18,918
$
17,556
$
22,740
$
19,984
$
19,664
 
 
 
 
 
 
 
 
 
 
 
FFO per share and unit - basic and diluted
$
0.14
$
0.14
$
0.17
$
0.16
$
0.16
 
 
 
 
 
 
 
 
 
 
 
Adjusted funds from operations(1)
 
 
 
 
 
 
 
 
 
 
Funds from operations applicable to common shares and Units
$
18,918
$
17,556
$
22,740
$
19,984
$
19,664
Adjustments:
 
 
 
 
 
 
 
 
 
 
Tenant improvements at same-store(2) properties
 
(2,169)
 
(1,610)
 
(4,205)
 
(1,841)
 
(2,343)
Leasing costs at same-store properties(2)
 
(578)
 
(1,038)
 
(1,219)
 
(735)
 
(916)
Recurring capital expenditures(1)(2)
 
(1,386)
 
(1,118)
 
(1,093)
 
(1,364)
 
(1,401)
Straight-line rents
 
(268)
 
(70)
 
(818)
 
(666)
 
(652)
Non-real estate depreciation
 
99
 
102
 
99
 
82
 
85
Share-based compensation expense
 
1,029
 
228
 
228
 
229
 
229
Gain on involuntary conversion
 
0
 
0
 
(1,514)
 
0
 
(966)
Adjusted funds from operations applicable to common shares and Units
$
15,645
$
14,050
$
14,218
$
15,689
$
13,700
 
 
 
 
 
 
 
 
 
 
 
AFFO per share and unit - basic and diluted
$
0.12
$
0.11
$
0.11
$
0.12
$
0.11
 
 
 
 
 
 
 
 
 
 
 
Weighted average shares and units
 
131,332
 
129,244
 
128,027
 
126,713
 
124,179

(1)
See Definitions on page 28.
(2)
Quarterly information is for properties in the same-store pool at that point in time; consequently, quarterly numbers may not total to year-to-date numbers.






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

 
Three Months Ended
 
7/31/2014
4/30/2014
1/31/2014
10/31/2013
07/31/2013
Adjusted EBITDA(1)
 
 
 
 
 
 
 
 
 
 
Net (loss) income attributable to Investors Real Estate Trust
$
(151)
$
(28,542)
$
3,503
$
8,787
$
3,078
Adjustments:
 
 
 
 
 
 
 
 
 
 
Noncontrolling interests – Operating Partnership
 
(402)
 
(6,082)
 
130
 
1,226
 
50
(Loss) income before noncontrolling interests – Operating Partnership
 
(553)
 
(34,624)
 
3,633
 
10,013
 
3,128
Add:
 
 
 
 
 
 
 
 
 
 
Interest expense
 
14,664
 
14,617
 
15,159
 
14,904
 
14,883
Depreciation/amortization related to real estate investments
 
16,198
 
16,449
 
16,825
 
16,675
 
18,593
Amortization related to non-real estate investments
 
872
 
826
 
758
 
839
 
993
Amortization related to real estate revenues(2)
 
65
 
66
 
62
 
59
 
54
Impairment of real estate investments
 
2,320
 
37,768
 
4,798
 
57
 
1,803
Less:
 
 
 
 
 
 
 
 
 
 
Interest income
 
(560)
 
(562)
 
(573)
 
(585)
 
(188)
(Gain) loss on sale of real estate and other investments
 
2,993
 
51
 
(358)
 
(4,698)
 
(1,943)
Gain on involuntary conversion
 
0
 
0
 
(1,514)
 
0
 
(966)
Adjusted EBITDA
$
35,999
$
34,591
$
38,790
$
37,264
$
36,357
(1) Definitions on page 28.
(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
2015 (remainder)
$
50,617
$
0
$
50,617
5.47%
5.0%
2016
 
71,320
 
0
 
71,320
5.48%
7.0%
2017
 
183,126
 
15,000
 
198,126
5.68%
19.4%
2018
 
74,885
 
22,000
 
96,885
4.18%
9.5%
2019
 
88,058
 
5,435
 
93,493
5.80%
9.2%
2020
 
110,402
 
2,997
 
113,399
5.82%
11.1%
2021
 
130,649
 
0
 
130,649
5.30%
12.9%
2022
 
131,473
 
0
 
131,473
5.61%
12.9%
2023
 
37,736
 
0
 
37,736
4.25%
3.7%
2024
 
73,734
 
0
 
73,734
4.32%
7.3%
Thereafter
 
20,142
 
0
 
20,142
5.03%
2.0%
Total maturities
$
972,142
$
45,432
$
1,017,574
5.32%
100.0%
 

(1)
Weighted average interest rate of debt that matures in fiscal year.
 
7/31/2014
4/30/2014
1/31/2014
10/31/2013
7/31/2013
Balances Outstanding
 
 
 
 
 
 
 
 
 
 
Mortgage
 
 
 
 
 
 
 
 
 
 
Fixed rate
$
972,142
$
977,224
$
1,000,222
$
1,012,813
$
1,014,632
Variable rate
 
45,432
 
20,465
 
8,302
 
8,357
 
15,775
Mortgage total
$
1,017,574
$
997,689
$
1,008,524
$
1,021,170
$
1,030,407
 
 
 
 
 
 
 
 
 
 
 
Weighted Average Interest Rates
 
 
 
 
 
 
 
 
 
 
Secured
 
5.32%
 
5.37%
 
5.48%
 
5.50%
 
5.54%





INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
LONG-TERM MORTGAGE DEBT* DETAIL AS OF JULY 31, 2014
(in thousands)
Property
Maturity Date
Fiscal 2015
Fiscal 2016
Fiscal 2017
Fiscal 2018
Thereafter
Total(1)
 
 
 
 
 
 
 
 
Multi-Family Residential
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Evergreen II - Isanti, MN
11/1/2014
 
$
2,098
$
0
$
0
$
0
$
0
$
2,098
 Campus Center - St Cloud, MN
6/1/2015
 
 
0
 
1,186
 
0
 
0
 
0
 
1,186
 Campus Knoll - St Cloud, MN
6/1/2015
 
 
0
 
791
 
0
 
0
 
0
 
791
 Landmark - Grand Forks, ND
8/24/2015
 
 
0
 
1,622
 
0
 
0
 
0
 
1,622
 Regency Park Estates - St Cloud, MN
1/1/2016
 
 
0
 
6,791
 
0
 
0
 
0
 
6,791
 Pebble Springs – Bismarck, ND
7/1/2016
 
 
0
 
0
 
770
 
0
 
0
 
770
 Southview – Minot, ND
7/1/2016
 
 
0
 
0
 
1,053
 
0
 
0
 
1,053
 Homestead Gardens I – Rapid City, SD
7/11/16
 
 
0
 
0
 
7,147
 
0
 
0
 
7,147
 River Ridge – Bismarck, ND
6/30/17
 
 
0
 
0
 
0
 
13,200
 
0
 
13,200
 Williston Garden – Williston, ND
10/1/2017
 
 
0
 
0
 
0
 
11,823
 
0
 
11,823
 Ponds – Sartell, MN
11/1/2017
 
 
0
 
0
 
0
 
3,926
 
0
 
3,926
 Summary of Debt due after Fiscal 2018
 
 
 
0
 
0
 
0
 
0
 
361,291
 
361,291
Sub-Total Multi-Family Residential
 
 
$
2,098
$
10,390
$
8,970
$
28,949
$
361,291
$
411,698
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial Office
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Burnsville Bluffs II - Burnsville, MN
8/8/2014
 
$
1,669
$
0
$
0
$
0
$
0
$
1,669
 Plymouth IV - Plymouth, MN
8/8/2014
 
 
3,078
 
0
 
0
 
0
 
0
 
3,078
 Plymouth V - Plymouth, MN
8/8/2014
 
 
3,597
 
0
 
0
 
0
 
0
 
3,597
 Plaza VII - Boise, ID (2)
9/1/2014
 
 
914
 
0
 
0
 
0
 
0
 
914
 Crosstown Centre - Eden Prairie, MN
12/1/2014
 
 
3,144
 
0
 
0
 
0
 
0
 
3,144
 Crosstown Centre - Eden Prairie, MN
12/1/2014
 
 
9,433
 
0
 
0
 
0
 
0
 
9,433
 Northgate I - Maple Grove, MN
12/10/2014
 
 
4,928
 
0
 
0
 
0
 
0
 
4,928
 Plymouth I - Plymouth, MN
12/10/2014
 
 
1,105
 
0
 
0
 
0
 
0
 
1,105
 Plymouth II - Plymouth, MN
12/10/2014
 
 
1,105
 
0
 
0
 
0
 
0
 
1,105
 Plymouth III - Plymouth, MN
12/10/2014
 
 
1,359
 
0
 
0
 
0
 
0
 
1,359
 Benton Business Park - Sauk Rapids, MN
1/1/2015
 
 
473
 
0
 
0
 
0
 
0
 
473
 West River Business Park - Waite Park, MN
1/1/2015
 
 
473
 
0
 
0
 
0
 
0
 
473
 Highlands Ranch I - Highlands Ranch, CO
3/1/2015
 
 
7,933
 
0
 
0
 
0
 
0
 
7,933
 Highlands Ranch II - Highlands Ranch, CO
3/1/2015
 
 
7,525
 
0
 
0
 
0
 
0
 
7,525
 US Bank Financial Center - Bloomington, MN
7/1/2015
 
 
0
 
13,022
 
0
 
0
 
0
 
13,022
 Rapid City 900 Concourse Drive - Rapid City, SD
8/1/2015
 
 
0
 
571
 
0
 
0
 
0
 
571
 Westgate I - Boise, ID
8/1/2015
 
 
0
 
1,147
 
0
 
0
 
0
 
1,147
 Westgate II - Boise, ID
8/1/2015
 
 
0
 
2,807
 
0
 
0
 
0
 
2,807
 Brook Valley I - LaVista, NE
1/1/2016
 
 
0
 
1,245
 
0
 
0
 
0
 
1,245
 Spring Valley IV - Omaha, NE
1/1/2016
 
 
0
 
741
 
0
 
0
 
0
 
741
 Spring Valley V - Omaha, NE
1/1/2016
 
 
0
 
815
 
0
 
0
 
0
 
815
 Spring Valley X - Omaha, NE
1/1/2016
 
 
0
 
756
 
0
 
0
 
0
 
756
 Spring Valley XI - Omaha, NE
1/1/2016
 
 
0
 
741
 
0
 
0
 
0
 
741
 American Corporate Center – Mendota Heights, MN
9/1/2016
 
 
0
 
0
 
8,764
 
0
 
0
 
8,764
 Mendota Office Center I – Mendota Heights, MN
9/1/2016
 
 
0
 
0
 
3,774
 
0
 
0
 
3,774
 Mendota Office Center II - Mendota Heights, MN
9/1/2016
 
 
0
 
0
 
5,576
 
0
 
0
 
5,576
 Mendota Office Center III - Mendota Heights, MN
9/1/2016
 
 
0
 
0
 
3,832
 
0
 
0
 
3,832






 INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
LONG-TERM MORTGAGE DEBT* DETAIL AS OF JULY 31, 2014 (continued)
(in thousands)
Property
Maturity Date
Fiscal 2015
Fiscal 2016
Fiscal 2017
Fiscal 2018
Thereafter
Total(1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial Office - continued
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Mendota Office Center IV - Mendota Heights, MN
9/1/2016
 
$
0
$
0
$
4,556
$
0
$
0
$
4,556
 Corporate Center West – Omaha, NE(3)
10/6/2016
 
 
0
 
0
 
17,315
 
0
 
0
 
17,315
 Farnam Executive Center – Omaha, NE(3)
10/6/2016
 
 
0
 
0
 
12,160
 
0
 
0
 
12,160
 Flagship – Eden Prairie, MN(3)
10/6/2016
 
 
0
 
0
 
21,565
 
0
 
0
 
21,565
 Gateway Corporate Center – Woodbury, MN(3)
10/6/2016
 
 
0
 
0
 
8,700
 
 
0
 
0
 
8,700
 Miracle Hills One – Omaha, NE(3)
10/6/2016
 
 
0
 
0
 
8,895
 
0
 
0
 
8,895
 Pacific Hills – Omaha, NE(3)
10/6/2016
 
 
0
 
0
 
16,770
 
0
 
0
 
16,770
 Riverport – Maryland Heights, MO(3)
10/6/2016
 
 
0
 
0
 
19,690
 
0
 
0
 
19,690
 Timberlands – Leawood, KS(3)
10/6/2016
 
 
0
 
0
 
13,155
 
0
 
0
 
13,155
 Woodlands Plaza IV – Maryland Heights, MO(3)
10/6/2016
 
 
0
 
0
 
4,360
 
0
 
0
 
4,360
 2030 Cliff Road – Eagan, MN
1/11/2017
 
 
0
 
0
 
930
 
0
 
0
 
930
 TCA Building – Eagan, MN
2/3/2017
 
 
0
 
0
 
7,500
 
0
 
0
 
7,500
 Interlachen Corporate Center – Eagan, MN
6/30/17
 
 
0
 
0
 
0
 
8,800
 
0
 
8,800
 Plymouth 5095 Nathan Lane – Plymouth, MN
11/1/2017
 
 
0
 
0
 
0
 
1,173
 
0
 
1,173
 Prairie Oak Business Center – Eden Prairie, MN
11/1/2017
 
 
0
 
0
 
0
 
3,192
 
0
 
3,192
 7800 West Brown Deer Road – Milwaukee, WI
4/1/2018
 
 
0
 
0
 
0
 
10,471
 
0
 
10,471
 Summary of Debt due after Fiscal 2018
 
 
 
0
 
0
 
0
 
0
 
77,775
 
77,775
Sub-Total Commercial Office
 
 
$
46,736
$
21,845
$
157,542
$
23,636
$
77,775
$
327,534
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial Healthcare
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Garden View Medical - St Paul, MN
8/1/2015
 
$
0
$
644
$
0
$
0
$
0
$
644
 Edina 6363 France Medical - St Paul, MN
8/6/2015
 
 
0
 
9,765
 
0
 
0
 
0
 
9,765
 2800 Medical Building - Minneapolis, MN
9/1/2015
 
 
0
 
5,152
 
0
 
0
 
0
 
5,152
 2828 Medical Building - Minneapolis, MN
9/1/2015
 
 
0
 
8,174
 
0
 
0
 
0
 
8,174
 Edina 6405 France Medical - Edina, MN
9/1/2015
 
 
0
 
8,393
 
0
 
0
 
0
 
8,393
 Ritchie Medical Plaza - St Paul, MN
9/1/2015
 
 
0
 
6,167
 
0
 
0
 
0
 
6,167
 Airport Medical – Bloomington, MN
6/1/2016
 
 
0
 
0
 
687
 
0
 
0
 
687
 Park Dental – Brooklyn Center, MN
6/1/2016
 
 
0
 
0
 
394
 
0
 
0
 
394
 Edgewood Vista – Fargo, ND
10/25/2016
 
 
0
 
0
 
12,276
 
0
 
0
 
12,276
 Sartell 2000 23rd St S – Sartell, MN
12/1/2016
 
 
0
 
0
 
2,247
 
0
 
0
 
2,247
 Billings 2300 Grant Road – Billings, MT
12/31/2016
 
 
0
 
0
 
1,394
 
0
 
0
 
1,394
 Missoula 3050 Great Northern Ave – Missoula, MT
12/31/2016
 
 
0
 
0
 
1,452
 
0
 
0
 
1,452
 High Pointe Health Campus – Lake Elmo, MN
4/1/2017
 
 
0
 
0
 
7,500
 
0
 
0
 
7,500
 Edgewood Vista – Billings, MT
4/10/2017
 
 
0
 
0
 
1,829
 
0
 
0
 
1,829
 Edgewood Vista – East Grand Forks, MN
4/10/2017
 
 
0
 
0
 
2,787
 
0
 
0
 
2,787
 Edgewood Vista – Sioux Falls, SD
4/10/2017
 
 
0
 
0
 
1,048
 
0
 
0
 
1,048
 Edgewood Vista – Fremont, NE
3/1/2018
 
 
0
 
0
 
0
 
567
 
0
 
567
 Edgewood Vista – Hastings, NE
3/1/2018
 
 
0
 
0
 
0
 
584
 
0
 
584
 Edgewood Vista – Hermantown I, MN
3/1/2018
 
 
0
 
0
 
0
 
15,668
 
0
 
15,668
 Edgewood Vista – Kalispell, MT
3/1/2018
 
 
0
 
0
 
0
 
586
 
0
 
586
 Edgewood Vista – Missoula, MT
3/1/2018
 
 
0
 
0
 
0
 
832
 
0
 
832
 Edgewood Vista – Omaha, NE
3/1/2018
 
 
0
 
0
 
0
 
370
 
0
 
370
 Edgewood Vista – Virginia, MN
3/1/2018
 
 
0
 
0
 
0
 
13,328
 
0
 
13,328
 St Michael Clinic – St. Michael, MN
4/1/2018
 
 
0
 
0
 
0
 
1,837
 
0
 
1,837
 Summary of Debt due after Fiscal 2018
 
 
 
0
 
0
 
0
 
0
 
137,121
 
137,121
Sub-Total Commercial Healthcare
 
 
$
0
$
38,295
$
31,614
$
33,772
$
137,121
$
240,802






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

Property
Maturity Date
Fiscal 2015
Fiscal 2016
Fiscal 2017
Fiscal 2018
Thereafter
Total(1)
Commercial Industrial
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Stone Container - Fargo, ND
12/1/2015
 
$
0
$
353
$
0
$
0
$
0
$
353
 Stone Container - Fargo, ND
12/1/2015
 
 
0
 
437
 
0
 
0
 
0
 
437
 Urbandale 3900 106th Street – Urbandale, IA
7/5/2017
 
 
0
 
0
 
0
 
10,528
 
0
 
10,528
 Summary of Debt due after Fiscal 2018
 
 
 
0
 
0
 
0
 
0
 
2,280
 
2,280
Sub-Total Commercial Industrial
 
 
$
0
$
790
$
0
$
10,528
$
2,280
$
13,598
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial Retail
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Jamestown Buffalo Mall - Jamestown, ND
9/1/2014
 
 
56
 
0
 
0
 
0
 
0
 
56
 Fargo Express Center - Fargo, ND
10/1/2014
 
 
868
 
0
 
0
 
0
 
0
 
868
 Lakeville Strip Center - Lakeville, MN
10/1/2014
 
 
859
 
0
 
0
 
0
 
0
 
859
 Summary of Debt due after Fiscal 2018
 
 
 
0
 
0
 
0
 
0
 
22,159
 
22,159
Sub-Total Commercial Retail
 
 
$
1,783
$
0
$
0
$
0
$
22,159
$
23,942
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total
 
 
$
50,617
$
71,320
$
197,674
$
96,885
$
600,272
$
1,016,768
* 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 July 31, 2014, the Company had borrowings of $35.5 million outstanding under this line. Construction loans and other debt totaled $83.6 million as of July 31, 2014.
(1) Totals are principal balances as of July 31, 2014.
(2) Loan was paid off subsequent to July 31, 2014.
(3) Amount is part of a non-recourse $122.6 million CMBS loan, for which nine of the Company's commercial office properties serve as collateral and under which a special-purpose subsidiary of the Company is the borrower. This loan matures in October 2016. Because the loan amount significantly exceeds the Company's current estimate of the fair value of this nine-property portfolio, the Company contacted the master servicer to initiate discussions on various alternatives with regard to the loan. During the first quarter of fiscal year 2015, the Company was notified that the loan has been transferred to the special servicer. The Company cannot predict the outcome of discussions with the special servicer regarding the loan. Cash flow from the portfolio currently covers debt service on the loan, and to date the borrower is current on all payments under the loan.








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

 
Three Months Ended
 
7/31/2014
4/30/2014
1/31/2014
10/31/2013
7/31/2013
Equity Capitalization
 
 
 
 
 
 
 
 
 
 
Common shares outstanding
 
114,763
 
109,019
 
106,937
 
105,554
 
104,226
Operating partnership (OP) units outstanding
 
17,975
 
21,094
 
21,799
 
21,836
 
21,849
Total common shares and OP units outstanding
 
132,738
 
130,113
 
128,736
 
127,390
 
126,075
Market price per common share (closing price at end of period)
$
8.52
$
8.72
$
8.69
$
8.62
$
8.64
Equity capitalization-common shares and OP units
$
1,130,928
$
1,134,585
$
1,118,716
$
1,098,102
$
1,089,288
Recorded book value of preferred shares
$
138,674
$
138,674
$
138,674
$
138,674
$
138,674
Total equity capitalization
$
1,269,602
$
1,273,259
$
1,257,390
$
1,236,776
$
1,227,962
 
 
 
 
 
 
 
 
 
 
 
Debt Capitalization
 
 
 
 
 
 
 
 
 
 
Total debt
$
1,135,892
$
1,083,321
$
1,078,741
$
1,062,788
$
1,072,696
Total capitalization
$
2,405,494
$
2,356,580
$
2,336,131
$
2,299,564
$
2,300,658
 
 
 
 
 
 
 
 
 
 
 
Total debt to total capitalization
 
0.47:1
 
0.46:1
 
0.46:1
 
0.46:1
 
0.47:1
 
 
 
 
 
 
 
 
 
 
 


 
Three Months Ended
 
7/31/2014
4/30/2014
1/31/2014
10/31/2013
7/31/2013
Earnings to fixed charges(1)
 
(2)
 
(3)
 
1.15x
 
1.25x
 
1.13x
Earnings to combined fixed charges and preferred distributions(1)
 
(2)
 
(3)
 
0.97x
 
1.05x
 
0.95x
Debt service coverage ratio(1)
 
1.57x
 
1.53x
 
1.46x
 
1.64x
 
1.54x
 
 
 
 
 
 
 
 
 
 
 
Distribution Data
 
 
 
 
 
 
 
 
 
 
Common shares and units outstanding at record date
 
130,795
 
129,372
 
128,004
 
126,629
 
123,976
Total common distribution paid
$
17,004
$
16,819
$
16,639
$
16,461
$
16,093
Common distribution per share and unit
$
.1300
$
.1300
$
.1300
$
.1300
$
.1300
Payout ratio (FFO per share and unit basis)(1)
 
92.9%
 
92.9%
 
76.5%
 
81.3%
 
81.3%
Payout ratio (AFFO per share and unit basis)(1)
 
108.3%
 
118.2%
 
118.2%
 
108.3%
 
118.2%

(1) See Definitions on page 28.
(2) Due to non-cash asset impairment and loss on sale charges of $5.3 million in the three months ended July 31, 2014, earnings were inadequate to cover fixed charges and combined fixed charges and preferred distributions by $1.6 million and $4.5 million, respectively. Excluding the asset impairment and loss on sale charges, the ratios of earnings to fixed charges and earnings to combined fixed charges and preferred distributions would have been 1.24 and 1.05, respectively, for the three months ended July 31, 2014.
(3) Due to non-cash asset impairment charges of $37.8 million in the three months ended April 30, 2014, earnings were inadequate to cover fixed charges and combined fixed charges and preferred distributions by $35.3 million and $38.2 million, respectively. Excluding the asset impairment charge, the ratios of earnings to fixed charges and earnings to combined fixed charges and preferred distributions would have been 1.16 and 0.98, respectively, for the three months ended April 30, 2014.





INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
SAME-STORE PROPERTIES NET OPERATING INCOME SUMMARY
(in thousands)

 
Same-Store Properties(1)
 
Three Months Ended
July 31,
Segment
2014
2013
%
Change
Multi-Family Residential
$
13,396
$
13,468
(0.5)%
Commercial Office
 
9,517
 
9,563
(0.5)%
Commercial Healthcare
 
11,766
 
11,789
(0.2)%
Commercial Industrial
 
1,152
 
1,196
(3.7)%
Commercial Retail
 
2,292
 
2,006
14.3%
 
$
38,123
$
38,022
0.3%
(1) See list of properties excluded from same-store properties on page iii.





INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
NET OPERATING INCOME DETAIL
(in thousands)
 
Three Months Ended July 31, 2014
 
Reporting Segments
 
 
 
Multi-Family
Residential
Commercial
Office
Commercial
Healthcare
Commercial
Industrial
Commercial
Retail
Corporate and
Other
Total
Real estate rental revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Same-store(1)
$
24,547
$
18,837
$
16,130
$
1,497
$
3,396
$
0
$
64,407
Non-same-store
 
3,180
 
9
 
168
 
73
 
0
 
0
 
3,430
Total
 
27,727
 
18,846
 
16,298
 
1,570
 
3,396
 
0
 
67,837
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Real estate expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Same-store(1)
 
11,151
 
9,320
 
4,364
 
345
 
1,104
 
0
 
26,284
Non-same-store
 
1,070
 
7
 
52
 
105
 
0
 
0
 
1,234
Total
 
12,221
 
9,327
 
4,416
 
450
 
1,104
 
0
 
27,518
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net operating income (NOI)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Same-store(1)
 
13,396
 
9,517
 
11,766
 
1,152
 
2,292
 
0
 
38,123
Non-same-store
 
2,110
 
2
 
116
 
(32)
 
0
 
0
 
2,196
Net operating income
$
15,506
$
9,519
$
11,882
$
1,120
$
2,292
$
0
$
40,319
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation of NOI to net income (loss) available to common shareholders
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TRS senior housing revenue
$
0
$
0
$
0
$
0
$
0
$
793
$
793
TRS senior housing expenses
 
0
 
0
 
0
 
0
 
0
 
(693)
 
(693)
Depreciation/amortization
 
(5,925)
 
(4,816)
 
(5,040)
 
(391)
 
(800)
 
(84)
 
(17,056)
Administrative, advisory and trustee fees
 
0
 
0
 
0
 
0
 
0
 
(3,664)
 
(3,664)
Impairment of real estate investments
 
0
 
0
 
0
 
0
 
0
 
(2,320)
 
(2,320)
Other expenses
 
0
 
0
 
0
 
0
 
0
 
(612)
 
(612)
Interest expense
 
(5,445)
 
(5,078)
 
(3,692)
 
(202)
 
(349)
 
102
 
(14,664)
Interest and other income
 
0
 
0
 
0
 
0
 
0
 
691
 
691
Income (loss) before loss on sale of real estate and other investments
 
4,136
 
(375)
 
3,150
 
527
 
1,143
 
(5,787)
 
2,794
Loss on sale of real estate and other investments
 
0
 
0
 
0
 
0
 
0
 
(2,993)
 
(2,993)
Net income (loss)
 
4,136
 
(375)
 
3,150
 
527
 
1,143
 
(8,780)
 
(199)
Net loss attributable to noncontrolling interests – Operating Partnership
 
0
 
0
 
0
 
0
 
0
 
402
 
402
Net income attributable to noncontrolling interests – consolidated real estate entities
 
0
 
0
 
0
 
0
 
0
 
(354)
 
(354)
Net income (loss) attributable to Investors Real Estate Trust
 
4,136
 
(375)
 
3,150
 
527
 
1,143
 
(8,732)
 
(151)
Dividends to preferred shareholders
 
0
 
0
 
0
 
0
 
0
 
(2,879)
 
(2,879)
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS
$
4,136
$
(375)
$
3,150
$
527
$
1,143
$
(11,611)
$
(3,030)
(1)
See list of properties excluded from same-store properties on page iii.





INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
NET OPERATING INCOME DETAIL
(in thousands)
 
Three Months Ended July 31, 2013
 
Reporting Segments
 
 
 
Multi-Family
Residential
Commercial
Office
Commercial
Healthcare
Commercial
Industrial
Commercial
Retail
Corporate and
Other
Total
Real estate rental revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Same-store(1)
$
24,007
$
19,262
$
16,073
$
1,518
$
3,299
$
0
$
64,159
Non-same-store
 
366
 
53
 
0
 
520
 
0
 
0
 
939
Total
 
24,373
 
19,315
 
16,073
 
2,038
 
3,299
 
0
 
65,098
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Real estate expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Same-store(1)
 
10,539
 
9,699
 
4,284
 
322
 
1,293
 
0
 
26,137
Non-same-store
 
307
 
54
 
0
 
132
 
10
 
0
 
503
Total
 
10,846
 
9,753
 
4,284
 
454
 
1,303
 
0
 
26,640
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gain on involuntary conversion
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Same-store(1)
 
0
 
0
 
0
 
0
 
0
 
0
 
0
Non-same-store
 
966
 
0
 
0
 
0
 
0
 
0
 
966
Total
 
966
 
0
 
0
 
0
 
0
 
0
9
966
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net operating income (NOI)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Same-store(1)
 
13,468
 
9,563
 
11,789
 
1,196
 
2,006
 
0
 
38,022
Non-same-store
 
1,025
 
(1)
 
0
 
388
 
(10)
 
0
 
1,402
Net operating income
$
14,493
$
9,562
$
11,789
$
1,584
$
1,996
$
0
$
39,424
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation of NOI to net income (loss) available to common shareholders
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Depreciation/amortization
$
(5,471)
$
(5,396)
$
(6,712)
$
(523)
$
(813)
$
(85)
$
(19,000)
Administrative, advisory and trustee fees
 
0
 
0
 
0
 
0
 
0
 
(2,753)
 
(2,753)
Other expenses
 
0
 
0
 
0
 
0
 
0
 
(679)
 
(679)
Interest expense
 
(5,336)
 
(5,106)
 
(3,628)
 
(331)
 
(506)
 
311
 
(14,596)
Interest and other income
 
0
 
0
 
0
 
0
 
0
 
210
 
210
Income (loss) from continuing operations
 
3,686
 
(940)
 
1,449
 
730
 
677
 
(2,996)
 
2,606
Income (loss) from discontinued operations
 
51
 
(282)
 
0
 
1,233
 
(392)
 
0
 
610
Net income (loss)
 
3,737
 
(1,222)
 
1,449
 
1,963
 
285
 
(2,996)
 
3,216
Net income attributable to noncontrolling interests – Operating Partnership
 
0
 
0
 
0
 
0
 
0
 
(50)
 
(50)
Net income attributable to noncontrolling interests – consolidated real estate entities
 
0
 
0
 
0
 
0
 
0
 
(88)
 
(88)
Net income (loss) attributable to Investors Real Estate Trust
 
3,737
 
(1,222)
 
1,449
 
1,963
 
285
 
(3,134)
 
3,078
Dividends to preferred shareholders
 
0
 
0
 
0
 
0
 
0
 
(2,879)
 
(2,879)
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS
$
3,737
$
(1,222)
$
1,449
$
1,963
$
285
$
(6,013)
$
199
(1) See list of properties excluded from same-store properties on page iii.






INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
SAME-STORE PROPERTIES AND ALL PROPERTIES OCCUPANCY LEVELS BY SEGMENT
1st Quarter Fiscal 2015 vs. 1st Quarter Fiscal 2014

Segments
Same-Store Properties
All Properties
 
1st Quarter
1st Quarter
1st Quarter
1st Quarter
 
Fiscal 2015
Fiscal 2014
Fiscal 2015
Fiscal 2014
Multi-Family Residential
93.8%
93.4%
93.4%
92.8%
Commercial Office
81.3%
81.5%
81.3%
80.8%
Commercial Healthcare
96.3%
95.4%
96.5%
95.4%
Commercial Industrial
100.0%
91.0%
100.0%
79.8%
Commercial Retail
86.3%
81.9%
86.3%
80.3%






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

 
Three Months Ended
 
7/31/2014
4/30/2014
1/31/2014
10/31/2013
7/31/2013
Number of Units
 
11,080
 
10,779
 
10,725
 
10,705
 
10,351
Average Investment Per Unit
 
 
 
 
 
 
 
 
 
 
Same-Store
$
65,956
$
61,323
$
61,187
$
60,592
$
60,118
Non-Same-Store
 
125,239
 
100,374
 
96,467
 
93,353
 
86,581
All Properties
$
71,326
$
69,905
$
68,728
$
67,034
$
64,743
 
 
 
 
 
 
 
 
 
 
 
Average Scheduled Rent(1) per Unit
 
 
 
 
 
 
 
 
 
 
Same-Store
$
825
$
785
$
781
$
771
$
764
Non-Same-Store
 
1,220
 
1,051
 
1,010
 
976
 
955
All Properties
$
861
$
843
$
830
$
811
$
797
 
 
 
 
 
 
 
 
 
 
 
Total Receipts per Unit
 
 
 
 
 
 
 
 
 
 
Same-Store
$
820
$
773
$
767
$
768
$
754
Non-Same-Store
 
1,067
 
971
 
947
 
951
 
968
All Properties
$
842
$
816
$
806
$
804
$
792
 
 
 
 
 
 
 
 
 
 
 
Total Recurring Capital Expenditures per Unit(1)
$
139
$
133
$
130
$
160
$
164
 
 
 
 
 
 
 
 
 
 
 
Occupancy%
 
 
 
 
 
 
 
 
 
 
Same-Store
 
93.8%
 
94.5%
 
93.5%
 
94.6%
 
93.3%
Non-Same-Store
 
89.5%
 
87.6%
 
85.3%
 
90.4%
 
90.7%
All Properties
 
93.4%
 
93.0%
 
91.8%
 
93.8%
 
92.9%
 
 
 
 
 
 
 
 
 
 
 
Operating Expenses as a % of Scheduled Rent
 
 
 
 
 
 
 
 
 
 
Same-Store
 
46.0%
 
50.2%
 
43.0%
 
45.6%
 
46.4%
Non-Same-Store
 
29.5%
 
45.9%
 
39.8%
 
41.0%
 
40.7%
All Properties
 
43.9%
 
49.0%
 
42.2%
 
44.5%
 
45.2%
(1)
See Definitions on page 28.
(2)
Previously-reported amounts are not revised for discontinued operations or changes in the composition of the same-store properties pool.





INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
COMMERCIAL LEASING SUMMARY (Same-Store Properties)

Commercial Leasing Activity
During fiscal year 2015, we have executed new and renewal commercial leases for our same-store rental properties on 289,981 square feet for the three months ended July 31, 2014. As a result of our leasing efforts, occupancy in our same-store commercial portfolio increased to 88.3% as of July 31, 2014, up from 86.6% as of July 31, 2013.
The total leasing activity for our same-store commercial rental properties, expressed in square feet of leases signed during the period, and the resulting occupancy levels are as follows:
Three Months Ended July 31, 2014
 
Square Feet of
New Leases(1)
Square Feet of
Leases Renewed(1)
Total
Square Feet of
Leases Executed(1)
 
Occupancy
 
 
Segments
2014
2013
2014
2013
2014
2013
 
2014
2013
Office
39,120
126,992
126,732
57,545
165,852
184,537
 
81.3%
81.5%
Healthcare
8,947
21,503
39,016
13,528
47,963
35,031
 
96.3%
95.4%
Industrial
0
50,040
0
222,077
0
272,117
 
100.0%
91.0%
Retail
24,222
91,957
51,944
12,565
76,166
104,522
 
86.3%
81.9%
Total
72,289
290,492
217,692
305,715
289,981
596,207
 
88.3%
86.6%
(1)
The leasing activity presented is based on leases signed or executed for our same-store 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.



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 same-store commercial rental properties:
Three Months Ended July 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
 
39,120
 
126,992
 
4.9
 
4.9
$
12.90
$
13.01
$
10.98
$
15.17
$
4.18
$
4.32
Healthcare
 
8,947
 
21,503
 
8.6
 
5.6
 
21.10
 
21.94
 
29.69
 
49.69
 
9.10
 
5.30
Industrial
 
0
 
50,040
 
0
 
4.3
 
0
 
4.10
 
0
 
0.00
 
0
 
0.34
Retail
 
24,222
 
91,957
 
4.5
 
4.3
 
9.00
 
3.62
 
14.96
 
0.57
 
5.47
 
4.20
Total
 
72,289
 
290,492
 
5.3
 
4.9
$
12.61
$
9.17
$
14.63
$
10.49
$
5.22
$
3.67
(1)
The leasing activity presented is based on leases signed or executed for our same-store 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.







INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
COMMERCIAL LEASING SUMMARY (Same-Store Properties)
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 increase in the average effective rental rates of new leases executed in the three months ended July 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 the prior period. 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 three months ended July 31, 2013 would have been $11.83 per square foot. The increase in the average effective rental rate of new leases executed in the total commercial portfolio for the three months ended July 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 three months ended July 31, 2014. 
Lease Renewals
The following table summarizes our lease renewal activity within our same-store commercial segments (square feet data in thousands):
Three Months Ended July 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
 
126,732
 
57,545
 
52.1%
 
90.5%
 
3.3
 
3.5
 
23.6%
 
1.7%
$
6.04
$
2.20
$
1.93
$
1.79
Healthcare
 
39,016
 
13,528
 
90.7%
 
100.0%
 
5.6
 
7.5
 
4.5%
 
7.3%
 
5.03
 
25.76
 
2.01
 
2.82
Industrial
 
0
 
222,077
 
0%
 
47.9%
 
0
 
3.3
 
0%
 
5.7%
 
0
 
0.00
 
0.00
 
0.30
Retail
 
51,944
 
12,565
 
25.6%
 
5.8%
 
4.3
 
4.2
 
27.0%
 
3.1%
 
4.78
 
0.00
 
0.13
 
0.00
Total
 
217,692
 
305,715
 
48.9%
 
56.8%
 
4.1
 
4.0
 
18.0%
 
4.5%
$
5.56
$
1.55
$
1.51
$
0.68
(1)
The leasing activity presented is based on leases signed or executed for our same-store 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.
(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 increase in the weighted average growth in effective rents for the three months ended July 31, 2014 in our commercial office and commercial retail segments when compared to the same period in the prior year was due to executed lease renewals in each segment that contained significant tenant improvement allowances.  These significant tenant improvement allowances negotiated by the tenants required increased rental rates to be negotiated by IRET as well.  Absent these leases, the weighted average growth rate in effective rents for the commercial office and commercial retail segments for the three months ended July 31, 2014 would have been 8.9% and 4.8% respectively and the weighted average growth in effective rents for the entire commercial portfolio would have been 6.2%.





INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
COMMERCIAL LEASING SUMMARY (Same-Store 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 July 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
2015(remainder)(1)
140
947,360
 
10.5%
$
13,122,352
 
10.7%
2016
125
1,253,811
 
14.0%
 
17,005,039
 
13.8%
2017
132
1,199,203
 
13.4%
 
19,622,750
 
16.0%
2018
90
721,809
 
8.0%
 
11,956,009
 
9.7%
2019
86
1,321,573
 
14.7%
 
16,344,306
 
13.3%
2020
43
652,264
 
7.2%
 
7,267,734
 
5.9%
2021
43
359,401
 
4.0%
 
5,436,404
 
4.4%
2022
42
1,352,847
 
15.1%
 
16,735,550
 
13.6%
2023
11
468,709
 
5.2%
 
2,021,818
 
1.6%
2024
46
428,590
 
4.8%
 
7,045,221
 
5.7%
Thereafter
16
276,677
 
3.1%
 
6,479,584
 
5.3%
Totals
774
8,982,244
 
100.0%
$
123,036,767
 
100.0%
(1)
Includes month-to-month leases. As of July 31, 2014 month-to-month leases accounted for 455,380 square feet.
(2)
Annualized Base Rent is monthly scheduled rent as of July 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 TRS.
Because of the diverse property types in the Company's commercial portfolio and the dispersed locations of a substantial portion of the portfolio's properties in secondary and tertiary markets, information on current market rents is difficult to obtain, is highly subjective, and is often not directly comparable between properties. As a result, the Company believes that the increase or decrease in effective rent on its recent leases is the most objective and meaningful information available regarding rent trends and the relationship between rents on leases expiring in the near-term and current market rents across the Company's markets. The Company believes that rents on its new and renewed leases generally approximate market rents.







INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
10 LARGEST COMMERCIAL TENANTS – BASED ON ANNUALIZED BASE RENT(1)
as of July 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
33
71
14.4%
1,521,147
16.9%
St. Luke's Hospital of Duluth, Inc.
6
20
3.7%
198,775
2.2%
Fairview Health Services
9
43
3.7%
250,711
2.8%
Applied Underwriters
3
31
2.4%
141,724
1.6%
HealthEast Care System
1
55
1.8%
114,316
1.3%
Affiliates of Siemens USA (NYSE: SI)
2
32
1.4%
112,848
1.3%
Nebraska Orthopaedic Hospital(2)
1
176
1.4%
61,758
0.7%
Microsoft (NASDAQ: MSFT)
1
53
1.3%
122,040
1.4%
Arcadis Corporate Services, Inc.
1
24
1.3%
34,502
0.4%
State of Idaho Department of Health and Welfare
2
43
1.2%
103,342
1.2%
Total/Weighted Average
 
53
32.6%
2,661,163
29.8%
(1) See Definitions on page 28.
(2) The tenant in the Company's Nebraska Orthopaedic Hospital property has exercised its option to purchase the property. The Company and its tenant are currently engaged in an arbitration proceeding pursuant to the lease agreement to determine the purchase price. The Company currently can give no assurance that the sale of the property pursuant to the purchase option will be completed.





INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
COMMERCIAL LEASE EXPIRATIONS
 as of July 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
 
 
 
 
 
 
 
 
2015(remainder)(3)
63
286,428
7.4%
$
5,444
$
19.01
9.3%
2016
59
716,733
18.5%
 
10,587
 
14.77
18.2%
2017
66
822,999
21.3%
 
14,420
 
17.52
24.7%
2018
48
470,042
12.1%
 
7,060
 
15.02
12.1%
2019
48
855,581
22.1%
 
11,106
 
12.98
19.1%
2020 and thereafter
60
719,049
18.6%
 
9,647
 
13.42
16.6%
 
344
3,870,832
100.0%
$
58,264
$
15.05
100.0%
 
 
 
 
 
 
 
 
 
Commercial Healthcare
 
 
 
 
 
 
 
 
2015(remainder)(4)
34
389,427
13.0%
$
5,574
$
14.31
11.2%
2016
24
160,918
5.4%
 
3,379
 
20.99
6.8%
2017
31
163,793
5.5%
 
3,477
 
21.23
7.0%
2018
21
174,514
5.9%
 
4,246
 
24.33
8.5%
2019
15
290,137
9.7%
 
4,168
 
14.37
8.4%
2020 and thereafter
102
1,806,049
60.5%
 
28,986
 
16.05
58.1%
 
227
2,984,838
100.0%
$
49,830
$
16.77
100.0%
 
 
 
 
 
 
 
 
 
Commercial Industrial
 
 
 
 
 
 
 
 
2015(remainder)(5)
0
0
0.0%
$
0
$
0.00
0.0%
2016
4
248,098
24.3%
 
1,542
 
6.22
30.6%
2017
1
69,600
6.8%
 
356
 
5.12
7.1%
2018
0
0
0.0%
 
0
 
0.00
0.0%
2019
5
127,600
12.5%
 
515
 
4.03
10.2%
2020 and thereafter
5
574,813
56.4%
 
2,634
 
4.58
52.1%
 
15
1,020,111
100.0%
$
5,047
$
4.95
100.0%
 
 
 
 
 
 
 
 
 
Commercial Retail
 
 
 
 
 
 
 
 
2015(remainder)(6)
43
271,505
24.5%
$
2,104
$
7.75
21.3%
2016
38
128,062
11.6%
 
1,497
 
11.69
15.1%
2017
34
142,811
12.9%
 
1,370
 
9.59
13.8%
2018
21
77,253
7.0%
 
650
 
8.41
6.6%
2019
18
48,255
4.4%
 
556
 
11.52
5.6%
2020 and thereafter
34
438,577
39.6%
 
3,719
 
8.48
37.6%
 
188
1,106,463
100.0%
$
9,896
$
8.94
100.0%
 
 
 
 
 
 
 
 
 
Commercial Total
 
 
 
 
 
 
 
 
2015(remainder)(7)
140
947,360
10.5%
$
13,122
$
13.85
10.7%
2016
125
1,253,811
14.0%
 
17,005
 
13.56
13.8%
2017
132
1,199,203
13.4%
 
19,623
 
16.36
15.9%
2018
90
721,809
8.0%
 
11,956
 
16.56
9.7%
2019
86
1,321,573
14.7%
 
16,345
 
12.37
13.3%
2020 and thereafter
201
3,538,488
39.4%
 
44,986
 
12.71
36.6%
 
774
8,982,244
100.0%
$
123,037
$
13.70
100.0%
(1) Excludes 98,174 square feet of income producing real estate operated within a TRS.
(2) Annualized Base Rent is monthly scheduled rent as of July 1, 2014 (cash basis), multiplied by 12.
(3) Includes month-to-month leases.  As of July 31, 2014 month-to-month leases accounted for 76,167 square feet.
(4) Includes month-to-month leases.  As of July 31, 2014 month-to-month leases accounted for 321,134 square feet.
(5) The Commercial Industrial segment has no month-to-month leases in place as of July 31, 2014.
(6) Includes month-to-month leases.  As of July 31, 2014 month-to-month leases accounted for 58,079 square feet.
(7) Includes month-to-month leases.  As of July 31, 2014 month-to-month leases accounted for 455,380 square feet.





INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
FISCAL 2015 ACQUISITION SUMMARY
as of July 31, 2014
(dollars in thousands)

Property
 
Location
 
Property Type
 
Acquisition
Date
Square
Feet/Units
Occupancy
At
Acquisition
July 31,
2014 Occupancy
Acquisition
Cost
 
 
 
 
 
 
 
 
 
 
 
 
Creekside Crossing
 
Bismarck, ND
 
Unimproved Land
 
May 22, 2014
n/a
n/a
n/a
$
4,269
Homestead Garden
 
Rapid City, SD
 
Multi-Family Residential
 
June 2, 2014
152
96.7%
95.4%
 
15,000
Silver Springs
 
Rapid City, SD
 
Multi-Family Residential
 
June 2, 2014
52
98.0%
94.2%
 
3,280
PrairieCare Medical
 
Brooklyn Park, MN
 
Unimproved Land
 
June 5, 2014
n/a
n/a
n/a
 
2,616
71 France Phase I(1)
 
Edina, MN
 
Unimproved Land
 
June 12, 2014
n/a
n/a
n/a
 
1,413
 
 
 
 
 
 
Total Square Feet
0
 
 
$
26,578
 
 
 
 
 
 
Total Units
204
 
 
 
 
(1)
Land is owned by a joint venture in which the Company currently has an approximately 55.3% interest. The joint venture is consolidated in IRET's financial statements






INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
FISCAL 2015 DEVELOPMENT PLACED IN SERVICE SUMMARY
as of July 31, 2014
(dollars in thousands)

Property(1)
 
Location
 
Segment Type
 
Date Placed in
Service
Square
Feet/Units
Occupancy
At
Date Placed in Service
July 31,
2014 Occupancy
Development
Cost
 
 
 
 
 
 
 
 
 
 
 
 
Dakota Commons(2)
 
Williston, ND
 
Multi-Family Residential
 
July 15, 2014
44
40.9%
40.9%
$
10,265
(1)
Development projects that are placed in service in phases are excluded from this table until the entire project has been placed in service. See Development in Progress Summary for additional information on the Renaissance Heights I project, which was partially placed in service during fiscal year 2014 and the three months ended July 31, 2014.
(2)
Development property placed in service July 15, 2014. Costs paid in fiscal year 2014 totaled $8.1 million, including the land acquired in fiscal year 2013. Additional costs paid in fiscal year 2015 totaled $2.2 million, for a total project cost at July 31, 2014 of $10.3 million.






INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES
FISCAL 2015 DEVELOPMENT IN PROGESS SUMMARY
as of July 31, 2014
(dollars in thousands)
 
 
 
 
(in thousands)
 
Project Name and Location
Planned Segment
Square Feet
or Number of Units
Percentage
Leased
or Committed
Anticipated
Total Cost
Costs as of
July 31, 2014(1)
Anticipated Construction Completion
Commons at Southgate - Minot, ND(2)
Multi-Family Residential
233 units
43.0%
$
37,201
$
33,218
FY2015 Q2
Minot Wells Fargo Bank - Minot, ND
Commercial Office
4,998 sq ft
100%
 
3,288
 
1,550
FY2015 Q2
Cypress Court II – St. Cloud, MN(3)
Multi-Family Residential
66 units
0%
 
7,028
 
3,168
FY2015 Q3
Arcata - Golden Valley, MN
Multi-Family Residential
165 units
0%
 
33,448
 
19,048
FY2015 Q3
Red 20 - Minneapolis, MN(4)
Multi-Family Residential and Commercial
130 units and 10,625 sq ft
21.0%
 
29,462
 
20,399
FY2015 Q3
Renaissance Heights I - Williston, ND(5)
Multi-Family Residential
288 units
42.8%
 
62,362
 
44,251
FY2015 Q4
Roseville 3075 Long Lake Rd - Roseville, MN
Commercial Industrial
202,807 sq ft
5.38%
 
13,915
 
2,578
FY2015 Q4
Chateau II - Minot, ND(6)
Multi-Family Residential
72 units
0%
 
14,711
 
5,681
FY2016 Q1
Cardinal Point - Grand Forks, ND
Multi-Family Residential
251 units
0%
 
40,042
 
9,333
FY2016 Q1
71 France Phase I - Edina, MN(7)
Multi-Family Residential
109 units
0%
 
29,660
 
4,255
FY2016 Q1
Edina 6565 France SMC III - Edina, MN
Commercial Medical
72,012 sq ft
0%
 
34,665
 
4,204
FY2016 Q2
PrairieCare Medical - Brooklyn Park, MN
Commercial Medical
75,000 sq ft
100%
 
24,251
 
4,486
FY2016 Q2
Deer Ridge – Jamestown, ND
Multi-Family Residential
163 units
0%
 
24,519
 
1,793
FY2016 Q2
Other
n/a
n/a
n/a
 
n/a
 
874
n/a
 
 
 
 
$
354,552
$
154,838
 
(1)
Includes costs related to development projects that are placed in service in phases (Renaissance Heights I - $23.0 million).
(2)
The Company is an approximately 52.9% partner in the joint venture entity constructing this project; the anticipated total cost amount given is the total cost to the joint venture entity.
(3)
The Company is an approximately 86.1% partner in the joint venture entity constructing this project; the anticipated total cost amount given is the total cost to the joint venture entity.
(4)
The Company is an approximately 58.6% partner in the joint venture entity constructing this project; the anticipated total cost amount given is the total cost to the joint venture entity.
(5)
The Company is an approximately 70% partner in the joint venture entity constructing this project; the anticipated total cost amount given is the total cost to the joint venture entity.
(6)
On December 5, 2013, this development project was destroyed by fire. As of July 31, 2014, $4.0 million of expected insurance proceeds were included in accounts receivable on the Company's consolidated balance sheet. See Note 2 for additional information.
(7)
The Company is currently an approximately 55.3% partner in the joint venture entity constructing this project. The project will be constructed in three phases, and at the conclusion of construction of the third phase, the Company will have an approximately 50.5% interest in the project. The anticipated total cost amount given in the table above is the total cost to the joint venture entity of the project's first phase. The expected total project cost for all three phases is approximately $69.9 million for a total of approximately 241 residential units and approximately 21,772 square feet of commercial retail space.







Definitions
July 31, 2014
Adjusted EBITDA is earnings before interest, taxes, depreciation, amortization, gain/loss on sale of real estate and other investments, impairment of real estate investments, gain/loss on extinguishment of debt and gain/loss from involuntary conversion. We consider Adjusted EBITDA to be an appropriate supplemental performance measure because it permits investors to view income from operations without the effect of depreciation, the cost of debt, or non-operating gains and losses. Adjusted EBITDA is a non-GAAP measure. Adjusted EBITDA as calculated by us is not comparable to Adjusted EBITDA reported by other REITs that do not define Adjusted EBITDA exactly as we do.
Adjusted funds from operations (AFFO) is calculated by subtracting from Funds from operations (FFO) (1) tenant improvements and leasing costs at same-store 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 and (4) share-based compensation expense. 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 same-store properties only, since we consider tenant improvement and leasing cost levels at non-same-store properties unrepresentative of expected levels at same-store properties. Previously-reported AFFO amounts are not revised for changes in the composition of the same-store 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 Adjusted EBITDA by interest expense and principal amortization.
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 classified as same-store (i.e., excluding capital expenditures on non-same-store 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.
Same-store 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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