0000798359-95-000005.txt : 19950925 0000798359-95-000005.hdr.sgml : 19950925 ACCESSION NUMBER: 0000798359-95-000005 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950731 FILED AS OF DATE: 19950913 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: INVESTORS REAL ESTATE TRUST CENTRAL INDEX KEY: 0000798359 STANDARD INDUSTRIAL CLASSIFICATION: 6798 IRS NUMBER: 450311232 STATE OF INCORPORATION: ND FISCAL YEAR END: 0430 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-14851 FILM NUMBER: 95573461 BUSINESS ADDRESS: STREET 1: 12 S MAIN CITY: MINOT STATE: ND ZIP: 58701 BUSINESS PHONE: 7018521756 MAIL ADDRESS: STREET 1: 12 S MAIN CITY: MINOT STATE: ND ZIP: 58701 10-Q 1 Form 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 For Quarter Ended July 31, 1995 Commission file number 0-14851 INVESTORS REAL ESTATE TRUST (Exact name of registrant as specified in its charter) North Dakota 45-0311232 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 12 South Main, Minot, ND 58701 (Address of principal executive offices) (Zip code) Registrant's telephone number, including area code:(701)852-1756 (Former name, former address and former fiscal year, if changed since last report.) No change Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes __X___ No ______ Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Applicant is a Business Trust. As of July 31, 1995, it had 11,697,025 Shares of Beneficial Interest outstanding. PART I Item 1. Financial Statements. The following financial statements have been prepared from the records of Investors Real Estate Trust and its seven affiliated limited partnerships and have not been audited or reviewed by the Trust's independent certified public accountants. Accordingly, these statements are subject to adjustments upon audit, which audit will be conducted for the Fiscal Year ending April 30, 1996. Reference is made to the footnotes to the Statements prepared by the Trust's auditors for the Fiscal Year ended April 30, 1995, contained in the Annual Report for Fiscal 1995. In the opinion of the Trust, there have been no developments requiring footnote disclosure for the periods covered by the Financial Statements set forth below that are not adequately disclosed in the footnotes to the April 30, 1995, statements. BALANCE SHEETS For the Periods Ended July 31, 1995 & 1994 (unaudited)
ASSETS: 07-31-95 07-31-94 Cash $ 1,442,979 $ 3,969,344 Marketable Securities 4,712,181 5,163,911 Tax & Insurance Escrow 906,502 481,169 Deferred Charges 225,787 232,910 Prepaid Insurance 76,787 33,917 Deposits 25,000 475,148 $ 7,389,236 $10,356,399 Real Estate Investments Real Estate Owned $112,423,263 $70,659,303 Less Accumulated Deprec. (13,580,483) (11,820,925) Net Real Estate Owned 98,842,780 58,838,378 Real Estate Mortgages (related) 117,692 628,444 Real Estate Mortgages (unrelated) 3,651,972 6,994,232 Less Unearned Discounts (34,792) (49,462) Less Deferred Gain from Property Dispositions (219,861) (235,360) Less Reserve for Bad Debts (267,096) (293,366) Net Mortgages & Contracts 3,247,915 7,044,488 Total Real Estate Investments $102,090,695 $65,882,866 TOTAL ASSETS $109,479,931 $76,239,265 LIABILITIES: Accounts Payable & Other Liabilities $ 4,890,340 $ 997,704 Mortgages Payable 58,305,787 38,502,596 Investment Certificates Payable 5,166,884 4,800,260 Due on Margin Account 0 0 TOTAL LIABILITIES $68,363,011 $44,300,560 SHAREHOLDERS' EQUITY Shares of Beneficial Interest Outstanding Shares of 07-31-95 07-31-94 11,697,025 as of 07/31/95 10,184,996 as of 07/31/94 $44,633,712 $35,762,886 Undistributed Net Income (3,516,792) (3,824,180) Total Shareholders' Equity $41,116,920 $31,938,706 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $109,479,931 $76,239,266
STATEMENT OF OPERATIONS For the Three-Month Periods Ended July 31, 1995 & 1994 (unaudited)
3 Months Ended July 31 OPERATING INCOME: 1995 1994 Real Estate Rentals $3,542,483 $2,992,775 Interest Income 215,178 287,821 Mortgage Discount & Fees 24,400 48,200 $3,782,061 $3,328,796 OPERATING EXPENSE: Interest $1,116,188 $ 831,868 Utilities & Maintenance 495,287 629,936 Property Management 163,863 177,318 Taxes & Insurance 371,562 288,501 Advisory & Trustees Fees 98,183 79,923 Operating Expenses 31,510 26,495 $2,276,593 $2,034,041 OPERATING INCOME (before reserves): $1,505,468 $1,294,755 DEPRECIATION (496,000) (450,000) OPERATING INCOME (after reserves): $1,009,468 $ 844,755 GAIN ON SALE OF INVESTMENTS 0 0 NET TAXABLE INCOME $1,009,468 $ 844,755 NET INCOME PER SHARE: Operating Income (after depreciation) .09 .08 Gain on Sale of Investments 0 0 Total Taxable Income/Share .09 .08 DIVIDENDS PAID PER SHARE .0925 .088 Average Number of Shares Outstanding 11,500,787 10,033,319
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE-MONTH PERIODS ENDED JULY 31, 1995, AND 1994 (unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES 1995 1994 Net Income $ 1,009,469 $ 844,756 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 496,000 450,000 Interest reinvested in investment certificates 14,375 30,131 Changes in other assets and liabilities: (Increase) decrease in other assets (564,305) (158,102) Increase in accounts payable and accrued expenses 431,283 403,678 NET CASH PROVIDED FROM OPERATING ACTIVITIES $1,386,822 $1,570,463 CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from sale of securities 120,415 107,543 Principal payments on mortgage loan receivables 1,305,458 881,331 Payments for acquisition of properties (20,443,742) (2,367,538) Investment in mortgage loan receivables (68,395) (51,204) NET CASH PROVIDED FROM (USED FOR) INVESTING ACTIVITIES $(19,086,264) $(1,429,868) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from loan refinance $ 8,657,569 $ 1,447,779 Proceeds from sale of shares 2,618,862 1,114,664 Dividends paid (408,420) (327,231) Proceeds from investment certificates issued 212,863 307,775 Loan on margin account 3,773,437 0 Redemption of investment certificates (142,293) (141,452) Principal payments on mortgage loans and notes payable (342,339) (564,365) Payments on margin account 0 0 NET CASH USED FOR FINANCING ACTIVITIES $14,369,679 $ 1,837,170 NET INCREASE (DECREASE) IN CASH $(3,329,763) $ 1,977,765 CASH AT APRIL 30 $ 4,772,742 $ 1,991,578 CASH AT JULY 31 $ 1,442,979 $ 3,969,343
SUPPLEMENTARY SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES 1995 1994 Dividends reinvested $ 655,347 $ 551,255 Real estate investment and mortgage loans receivable acquired through borrowings on margin account and new originations 8,657,569 1,827,651 Mortgages paid directly by owner of contract 0 5,007 Interest reinvested directly in investment certificates 14,375 30,131 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Cash paid during the year for: Interest paid on mortgages $ 1,043,164 $ 732,273 Interest paid on margin account and other 0 0 Interest paid on investment certificates 30,477 32,379 $10,400,932 $ 3,178,696
(The balance of this page was left blank intentionally.) Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. Results of Operations. IRET had net taxable earnings for its first quarter of Fiscal 1996 of $1,009,468, compared to $844,755 for the same period of the prior fiscal year, an increase of 19%. Funds from operations (taxable income increased by non-cash deductions of depreciation and amortization, less extraordinary income items) increased to $1,505,468 from the year earlier figure of $1,294,755, an increase of 16%. This increase in earnings and Funds From Operations resulted from: - the addition of the Pine Cone and West Stonehill apartment complexes to our portfolio. During the first month of ownership, earnings are favorably influenced because rental income is received in full, but many of the rental expenses are not reflected until the following month. - a continued strong rental market for most of our properties. Occupancy is at or above normal levels and we continue to seek rent increases. We continue to be pleased with the performance of our portfolio. The continued significant expansion of real estate investments by IRET will result in important earnings increases in the years ahead. For the short run, net taxable earnings will grow at a modest level. A considerable amount of capital is being invested in constructing new properties and no "income" can be recorded on this capital until the property is completed and begins to produce rental income. IRET has received notice that one of its tenants - Smith Home Furnishings - has filed for Chapter 11 bankruptcy production. The tenant has indicated that it plans to continue with our Boise, Idaho, store. If so, IRET will receive the agreed rent, but there is the possibility of a default and the necessity to re-rent the property. Financial Condition. IRET's liquidity and capital resources remain strong and the Trust will close on the purchase of a substantial amount of real estate investments during the balance of this fiscal year. Comparative balance sheet figures are:
07/31/95 07/31/94 Cash and Marketable Securities $ 6,155,160 $ 9,133,255 Net Real Estate Owned 98,842,780 58,838,377 Net Real Estate Mortgages 3,247,915 7,044,488 Total Assets 109,479,931 76,239,265 Total Liabilities 68,363,011 44,300,560 Shareholder Equity 41,116,920 31,938,705
Consolidated Financial Reports. The Financial Statements shown in this report consolidate IRET's financial report with those of the seven limited partnerships of which IRET is the General Partner and creditor. Sale of Properties. During the first quarter, IRET did not sell any of its properties, but an agreement to sell an office building at 108 Burdick Expressway East in Minot for $325,000 has been entered into. The gain on this sale will be reported in the second quarter. The following new investments were added to our portfolio during the first quarter and are producing income: - Barnes & Noble, Omaha, NE Cost: $3,675,000 15 yr. lease Return to IRET: 13.82% - West Stonehill, St. Cloud, MN Cost: $11,000,000 Units: 313 Return to IRET: 12.77% - 18 Plex, Minot, ND Cost: $590,000 Units: 18 The following properties are under construction: - Stone Container ($4,850,000 commercial building in Fargo, ND) - 49-unit apartment complex in Bismarck, ND - Land purchased in Douglasville, Georgia, to construct a retirement center - 196-unit apartment complex in Minot, ND - Land in Grand Forks, ND, and Billings, MT, to construct apartment complexes Dividends. IRET paid a regular dividend of 8.75 cents, plus a special dividend of .5 cents, for a total dividend of 9.25 cents per share on July 1, 1995, to shareholders of record at the close of business on June 23, 1995. This was in increase from the 8.625 cents per share dividend paid on April 1, 1995, and was the 97th consecutive quarterly dividend paid by IRET. PART II - OTHER INFORMATION Item 1. Legal Proceedings. None Item 2. Changes in Securities. None Item 3. Defaults Upon Senior Securities. None Item 4. Submission of Matters to a Vote of Security Holders. None Item 5. Other Information. None Item 6. Exhibits and Reports on Form 8-K. IRET filed a Form 8-K on July 6, 1995, pursuant to the purchase of a 313-unit (West Stonehill) apartment complex located in St. Cloud, Minnesota. Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. INVESTORS REAL ESTATE TRUST (Registrant) Date: September 8, 1995 By_______________________________ Thomas A. Wentz, Vice-President EX-27 2
5 3-MOS APR-30-1996 JUL-31-1995 1,442,979 4,712,181 3,769,664 (521,749) 0 1,234,076 112,423,263 (13,580,483) 109,479,931 4,890,340 63,472,671 44,633,712 0 0 (3,516,792) 109,479,931 0 3,782,061 0 1,656,405 0 0 1,116,188 1,009,468 0 1,009,188 0 0 0 1,009,188 .09 0