-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PdI32WAGpT/bZO4hMFSiP8t3DG7KqUrbuArrBz5ja1rN41WKfJikeauo0WUIR7P8 AFdFWuLN4d5KFsAiJNVcjQ== 0000798359-96-000004.txt : 19960409 0000798359-96-000004.hdr.sgml : 19960409 ACCESSION NUMBER: 0000798359-96-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960131 FILED AS OF DATE: 19960228 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: 96527337 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 January 31, 1996 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 January 31, 1996, it had 12,693,198 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 January 31, 1996 & 1995 (unaudited) ASSETS: 01-31-96 01-31-95 Cash $ 3,384,400 $ 5,729,487 Marketable Securities 4,508,382 4,906,239 Accounts Receivable 0 0 Tax & Insurance Escrow 1,087,235 459,445 Deferred Charges 490,860 243,196 Prepaid Insurance 153,389 87,287 Deposits 457,500 176,000 $10,081,766 $11,601,654 Real Estate Investments Real Estate Owned $128,339,454 $77,053,428 Less Accumulated Deprec. (14,245,319) (12,656,411) Net Real Estate Owned 114,094,135 64,397,017 Real Estate Mortgages (related) 0 122,535 Real Estate Mortgages (unrelated) 3,766,929 5,382,536 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 3,245,180 4,926,883 Total Real Estate Investments $117,339,315 $69,323,900 TOTAL ASSETS $127,421,081 $80,925,554 LIABILITIES: Accounts Payable & Other Liabilities $ 1,443,831 $ 1,258,775 Mortgages Payable 72,332,672 39,193,387 Investment Certificates Payable 5,994,973 4,512,463 Due on Margin Account 0 0 TOTAL LIABILITIES $79,771,476 $44,964,625 SHAREHOLDERS' EQUITY Shares of Beneficial Interest Outstanding Shares of 01-31-96 01-31-95 12,693,198 on 01/31/96 10,763,881 on 01/31/95 $50,727,029 $39,064,436 Undistributed Net Income (3,077,424) (3,103,507) Total Shareholders' Equity $47,649,605 $35,960,929 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $127,421,081 $80,925,554
STATEMENT OF OPERATIONS For the Three- and Nine-Month Periods Ended January 31, 1996 and 1995 (unaudited) 3 Months Ended January 31 OPERATING INCOME: 1996 1995 Real Estate Rentals $4,892,738 $3,245,354 Interest Income & Fees 211,671 328,714 $5,104,409 $3,574,068 OPERATING EXPENSE: Interest $1,554,110 $ 865,806 Utilities & Maintenance 782,100 622,300 Property Management 365,453 191,261 Taxes & Insurance 555,031 295,334 Advisory & Trustees Fees 124,801 83,930 Operating Expenses 34,408 16,426 $3,415,903 $2,075,057 OPERATING INCOME (before reserves): $1,688,506 $1,499,011 DEPRECIATION (606,000) (435,000) RESERVE FOR BAD DEBTS 0 0 OPERATING INCOME (after reserves): $1,082,506 $1,064,011 GAIN ON SALE OF INVESTMENTS 522,001 0 NET TAXABLE INCOME $1,604,507 $1,064,011 NET INCOME PER SHARE: Operating Income (after depreciation) .09 .10 Gain on Sale of Investments .04 0 Total Taxable Income/Share .13 .10 DIVIDENDS PAID PER SHARE .09 .085 Average Number of Shares Outstanding 12,382,227 10,559,744
9 Months Ended January 31 OPERATING INCOME: Real Estate Rentals $12,944,173 $ 9,508,065 Interest Income & Fees 657,483 1,011,768 13,601,656 $10,519,833 OPERATING EXPENSE: Interest $ 4,054,522 $ 2,534,221 Utilities & Maintenance 2,042,106 1,836,204 Property Management 887,034 583,236 Taxes & Insurance 1,409,370 872,336 Advisory & Trustees Fees 337,324 246,239 Operating Expenses 111,190 67,602 $ 8,841,546 $ 6,139,838 OPERATING INCOME (before reserves): $ 4,760,109 $ 4,379,995 LESS DEPRECIATION RESERVE (1,610,000) (1,355,000) RESERVE FOR BAD DEBTS 0 0 NET INCOME (after reserves): $ 3,150,109 $ 3,024,995 GAIN ON SALE OF INVESTMENTS 522,001 305,543 NET TAXABLE INCOME $ 3,672,110 $ 3,330,538 NET INCOME PER SHARE: Operating Income (after depreciation) .26 .30 Gain on Sale of Investments .04 .03 Total Taxable Income/Share .30 .33 DIVIDENDS PAID PER SHARE .27125 .2555 Average Number of Shares Outstanding 11,940,492 10,254,494
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE-MONTH PERIODS ENDED JANUARY 31, 1996, AND 1995 (unaudited) CASH FLOWS FROM OPERATING ACTIVITIES 1996 1995 Net Income $ 3,672,111 $ 3,330,538 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 1,610,000 1,355,000 Reserve for Bad Debts 0 0 Interest reinvested in investment certificates 187,266 151,820 Changes in other assets and liabilities: (Increase) decrease in other assets (1,369,242) (224,035) Increase in accounts payable and accrued expenses 692,751 220,565 NET CASH PROVIDED FROM OPERATING ACTIVITIES $ 4,792,886 $ 4,833,888 CASH FLOWS FROM INVESTING ACTIVITIES Real Estate Deposits $ (125,000) $ 0 Proceeds from principal payments on GNMA Securities 321,427 365,214 Principal payments on mortgage loan receivables 691,399 3,071,625 Payments for acquisition of properties (34,783,138) (6,142,793) Investment in mortgage loan receivables 0 (539,824) NET CASH PROVIDED FROM (USED FOR) INVESTING ACTIVITIES $(33,895,312) $(3,245,778) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from mortgage loans 20,854,211 1,447,779 Proceeds from sale of shares 9,166,442 3,433,591 Dividends paid (1,226,474) (1,042,471) Proceeds from investment certificates issued 1,164,989 554,108 Loan on margin account 0 0 Redemption of investment certificates (352,595) (599,410) Principal payments on mortgage loans and notes payable (1,892,489) (1,643,798) Payments on margin account 0 0 NET CASH PROVIDED BY FINANCING ACTIVITIES $ 27,714,084 $ 2,149,799 NET INCREASE (DECREASE) IN CASH $ (1,388,342) $ 3,737,909 CASH AT APRIL 30, 1995 $ 4,772,742 $ 1,991,578 CASH AT JANUARY 31, 1996 $ 3,384,400 $ 5,729,487
SUPPLEMENTARY SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES 1996 1995 Dividends reinvested $ 1,388,851 $ 1,604,294 Real estate investment and mortgage loans receivable acquired through borrowings on margin account and new originations 34,783,138 4,141,521 Mortgages paid directly by owner of contract 238,359 292,071 Interest reinvested directly in investment certificates 187,266 151,820 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Cash paid during the period for: Interest paid on mortgages $ 3,805,978 $ 2,264,221 Interest paid on margin account and other 0 0 Interest paid on investment certificates 114,132 128,410 $40,517,724 $ 8,582,337
(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. We are pleased to report the results of IRET's Third Quarter which ended on January 31, 1996. Earnings. IRET had net taxable earnings for the Third Quarter of Fiscal 1996 of $1,604,507, compared to $1,064,011 earned in the Third Quarter of the prior fiscal year. This year's results include $522,001 of capital gain income while no capital gain income was included in the prior year's results. For the first nine months of Fiscal 1996, net taxable income was $3,672,110, compared to $3,330,538 in the prior year. The 1996 results include $522,001 of capital gain compared to $305,543 of capital gain income in the prior year. On a per share basis, net income was $.13 for the Third Quarter (compared to $.10 last year) and $.30 for the nine- month period (compared to $.33 in the prior year). Funds from Operations. Funds from Operations (taxable income increased by non-cash deductions of depreciation and amortization, less extraordinary income items) for the Third Quarter increased to $1,688,506, from the $1,499,011 received in the prior year. For the nine-month period, funds from operations increased to $4,760,109 from $4,379,995 in the prior period. These changes in net taxable earnings and funds from operations resulted from: - A continuing strong rental environment in the cities in which we operate. We are experiencing a strong demand for our rental properties and have been able to increase rents at a rate greater than the inflation in our operating expenses. - The new properties that we have purchased and constructed are performing very well. We continue to see a rapid rent-up of our new properties at or above our projected rents. - A considerable amount of our capital continues to be invested in constructing new apartment buildings. During this construction period, our investment is not earning income and will continue to hold down our earnings for financial reporting purposes. - The Smith Home Furnishings property in Boise, Idaho, has not been re-rented. We do have a temporary tenant in part of the building, but we will continue to have a rent shortfall of approximately $45,000 a month until a new permanent tenant can be found. - We are in the process of refinancing many of our existing properties. Interest rates are declining and we expect to see lower interest expense in the months ahead. We continue to be pleased with the performance of our portfolio. We project a continuation of our earnings at the current level. Financial Condition. IRET's liquidity and capital resources remain strong and will enable IRET to continue its rapid expansion of real estate owned. Comparative balance sheet figures are: 01/31/96 01/31/95 Cash and Marketable Securities $ 7,892,782 $10,635,726 Net Real Estate Owned 114,094,135 64,397,017 Net Real Estate Mortgages 3,245,180 4,926,883 Total Assets 127,421,081 80,925,554 Total Liabilities 79,771,476 44,964,625 Shareholder Equity 47,649,605 35,960,929 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 Third Quarter, IRET sold properties from its portfolio resulting in a capital gain for financial reporting purposes of $522,001. For income tax purposes, IRET has elected to reinvest the proceeds of these sales to acquire like-kind real estate. New Investments. Since our last report to you, IRET has finished the construction of the following property. Construction has been completed and it is now producing rental income: Stone Container Commercial Building, Fargo, ND ($4,880,000 cost) The following properties are under construction: - Douglasville, Georgia, Retirement Center ($2,810,000 estimated cost) - 98 unit Apartment Complex - Minot, ND ($4,500,000 estimated cost) - 116 unit Apartment Complex - Grand Forks, ND ($5,225,000 estimated cost) - 98 unit Apartment Complex - Billings, MT ($5,000,000 estimated cost) Dividends. IRET paid its 99th consecutive quarterly dividend on January 5, 1996, of $.09 per share. This was an increase from the $.08875 per share dividend paid on October 1, 1995.
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. None 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: February 27, 1996 By_______________________________ Thomas A. Wentz, Vice-President
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