-----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, Ueq5V/iSunEx9yeRNGFA2WdGiXcNBqm5+TE4Dyq4OU9xnSNBFXL4Dh0uDfqlgh3c C0+3s/Dwfm+7ocHj/6V05Q== 0000798359-98-000020.txt : 19980902 0000798359-98-000020.hdr.sgml : 19980902 ACCESSION NUMBER: 0000798359-98-000020 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980731 FILED AS OF DATE: 19980901 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: INVESTORS REAL ESTATE TRUST CENTRAL INDEX KEY: 0000798359 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 450311232 STATE OF INCORPORATION: ND FISCAL YEAR END: 0430 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-14851 FILM NUMBER: 98702207 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 1ST QUARTER FISCAL 1999 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, 1998 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 North Dakota Real Estate Investment Trust. As of July 31, 1998, it had 16,767,369 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 six 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, 1999. Reference is made to the footnotes to the Statements prepared by the Trust's auditors for the Fiscal Year ended April 30, 1998, contained in the Annual Report for Fiscal 1998. 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, 1998, statements. BALANCE SHEETS (unaudited) ASSETS: 07-31-98 04-30-98 ------------ ------------ Cash $ 3,086,972 $ 2,132,220 Marketable Securities - GNMA's 3,453,882 3,536,538 - Other REIT's 646,708 720,688 Accounts Receivable 10,808 55,326 Tax & Insurance Escrow 1,697,758 1,254,068 Deferred Charges 1,210,551 1,088,016 Prepaid Insurance 141,967 219,871 Real Estate Deposits 2,683,861 2,493,713 General Partnerships 0 6,705 ------------ ------------ $ 12,932,502 $ 11,507,145 ------------ ------------ Real Estate Investments Real Estate Owned $240,046,889 $231,416,322 Less Accumulated Depreciation (22,575,451) (21,516,129) ------------ ------------ Net Real Estate Owned 217,471,438 209,900,193 ------------ ------------ Real Estate Mortgages 1,698,861 3,438,308 Less Unearned Discounts & Allowances (126,212) (127,132) ------------ ------------ Net Mortgages & Contracts 1,572,649 3,311,176 ------------ ------------ Total Real Estate Investments $219,044,087 $213,211,369 ------------ ------------ TOTAL ASSETS $231,976,590 $224,718,514 ============ ============ LIABILITIES: Accounts Payable & Accrued Expenses $ 2,822,462 $ 2,847,080 Due on Credit Line 0 1,000,000 Mortgages Payable 137,324,811 134,059,974 Investment Certificates Payable 10,869,391 10,369,561 ------------ ------------ TOTAL LIABILITIES $151,016,663 $148,276,615 ------------ ------------ Minority Interest in Operating Partnership $ 10,590,410 $ 8,289,273 ------------ ------------ SHAREHOLDERS' EQUITY Shares of Beneficial Interest Outstanding Shares of 07-31-98 04-30-98 ------------ ------------ 16,767,369 on 07/31/98 16,391,412 on 04/30/98 $ 77,245,225 $ 74,708,559 Undistributed Net Income (6,912,349) (6,666,555) Unrealized Gain REIT Stock 36,642 110,622 ------------ ------------ Total Shareholders' Equity $ 70,369,518 $ 68,152,626 ------------ ------------ TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $231,976,590 $224,718,514 ============ ============ STATEMENT OF OPERATIONS (unaudited) 3 Months Ended July 31 OPERATING INCOME: 1998 1997 ---- ---- Real Estate Rentals $ 8,866,408 $ 7,007,297 Interest Income 212,150 162,705 Mortgage Discount & Fees 23,720 13,759 ------------ ------------ $ 9,102,278 $ 7,183,761 ------------ ------------ OPERATING EXPENSE: Interest $ 2,816,108 $ 2,441,788 Utilities & Maintenance 1,505,146 1,118,751 Property Management 779,825 625,147 Taxes & Insurance 1,005,570 800,886 Advisory & Trustees Fees 195,178 150,648 Operating Expenses 63,358 53,466 ------------ ------------ $ 6,365,186 $ 5,190,686 ------------ ------------ OPERATING INCOME: (before reserves) $ 2,737,092 $ 1,993,075 ------------ ------------ DEPRECIATION/AMORTIZATION (1,409,241) (1,099,031) ------------ ------------ OPERATING INCOME (after reserves) 1,327,851 $ 894,044 GAIN ON SALE OF INVESTMENTS 366,017 39,069 MINORITY INTEREST PORTION OF OPERATING PARTNERSHIP NET INCOME (133,863) (7) ------------ ------------ NET TAXABLE INCOME $ 1,560,005 $ 933,106 ------------ ------------ FUNDS FROM OPERATIONS: * Operating Income $ 1,327,851 $ 894,044 Plus Depreciation and Amortization 1,409,241 1,099,031 Minus Minority Interest - Operating Partnership (133,863) (7) ------------ ------------ FUNDS FROM OPERATIONS $ 2,603,229 $ 1,993,082 ------------ ------------ PER SHARE: Operating Income (after reserves) .08 .06 Gain on Sale of Investments .02 .00 ------------ ------------ Total Taxable Income/Share .10 .06 ------------ ------------ FUNDS FROM OPERATIONS * .16 .13 ------------ ------------ DIVIDENDS PAID PER SHARE .11 .10125 ------------ ------------ Average Number of Shares Outstanding 16,579,390 15,081,101 ------------ ------------ * Funds from Operations is defined as income before gains (losses) on sales of investments, less minority interest of unitholders in operating partnership and extraordinary items, plus depreciation and amortization. CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE-MONTH PERIODS ENDED JULY 31, 1998 AND 1997 (unaudited) CASH FLOWS FROM OPERATING ACTIVITIES 1998 1997 ------------ ------------ Net Income $ 1,560,006 $ 933,106 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 1,409,241 1,099,030 Minority interest portion of operating partnership income 133,863 7 Accretion of discount on contracts (667) (1,427) Gain on Sale of Properties (366,017) (39,069) Interest reinvested in investment certificates 97,029 32,173 Changes in other assets and liabilities: (Increase) decrease in real estate deposits (71,250) 0 (Increase) decrease in other assets 122,428 (60,002) (Increase) decrease in tax and insurance escrow (443,690) 275,536 (Increase) decrease in deferred charges (122,535) 116,598 Increase (decrease) in accounts payable and accrued expenses 264,943 113,750 ------------ ------------ NET CASH PROVIDED FROM OPERATING ACTIVITIES $ 2,583,351 $ 2,469,702 ------------ ------------ CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from maturity of marketable securities held to maturity $ 82,656 $ 130,816 Principle payments on mortgage loans receivable 64,672 257,634 Proceeds from sale of property 892,349 250,000 Payments for acquisition and improvements of properties (7,422,457) (3,975,628) Purchase of marketable securities available for sale 0 (13,105) Investment in mortgage loans receivable 0 (75,959) ------------ ------------ NET CASH USED FOR INVESTING ACTIVITIES $ (6,382,780) $ (3,426,242) ------------ ------------ CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from sale of shares $ 2,721,085 $ 1,746,029 Proceeds from investment certificates issued 979,085 1,471,889 Proceeds from mortgages payable 3,769,936 650,000 Proceeds from short-term lines of credit 3,000,000 400,000 Proceeds from sale of minority interest 1,848,249 0 Repurchase of shares (1,389,936) (386,062) Dividends Paid (600,283) (531,683) Distribution paid to Minority Unitholders (161,502) 0 Redemption of investment certificates (644,627) (182,517) Principal payments on mortgage loans (767,828) (766,873) Payments on short-term lines of credit (4,000,000) (400,000) ------------ ------------ NET CASH PROVIDED FROM FINANCING ACTIVITIES $ 4,754,181 $ 2,000,783 ------------ ------------ NET INCREASE (DECREASE) IN CASH $ 954,752 $ 1,044,243 CASH AT APRIL 30 $ 2,132,220 $ 1,718,257 ------------ ------------ CASH AT JULY 31 $ 3,086,972 $ 2,762,500 ------------ ------------ SUPPLEMENTARY SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES 1998 1997 ------------ ------------ Dividends reinvested $ 1,205,517 $ 995,407 Real estate investment and mortgage loans receivable acquired through assumption of mortgage loans payable and accrual of costs 0 650,000 Mortgage loan receivable transferred to property owned 1,701,308 0 Proceeds from sale of properties deposited directly with escrow agent 0 0 Properties acquired through the issuance of minority interest units in the operating partnership 480,525 0 Interest reinvested directly in investment certificates 97,029 32,173 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Cash paid during the year for: Interest paid on mortgages $ 2,511,296 $ 2,310,449 Interest paid on margin account and other 15,486 373 Interest paid on investment certificates 86,742 53,744 ------------ ------------ $ 2,613,524 $ 2,364,566 ------------ ------------ Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. RESULTS OF OPERATION. IRET had an excellent First Quarter. Improved occupancy, rent increases and lower interest rates all contributed to strong gains in revenues, Funds from Operations and net income. - Funds From Operations. Funds from Operations for the first three months of Fiscal 1998 increased to $2,603,229, compared to $1,993,082 generated in the same period of the prior fiscal year, an increase of 31%. On a per share basis, Funds from Operations increased to 16 cents per share, compared to 13 cents for the prior year, an increase of 23%. Funds from Operations is regarded as the appropriate measure of performance for Real Estate Investment Trusts. - Operating Income. Operating income increased to $1,327,423 for the first quarter compared to $894,044 earned in the same period last year. The first quarter of last year saw a temporary spike in our vacancy rate for apartment properties which did not happen this year. Last year's experience appears to have been a temporary phenomena. - Smith Building. The first quarter results are all the more impressive considering the continued vacancy of the former Smith furniture store in Boise, Idaho. We have been close to signing leases with two tenants and continue to work with one. Hopefully, the building can be re-rented soon. We expect continued good results for the remainder of the current fiscal year. Occupancy rates are above normal and we expect to be able to raise rents in most communities. In particular, the new apartments built in Billings, Bismarck and Grand Forks have rented up quickly. We have additional land in those communities and plan to continue our building program. We are also negotiating to acquire other apartment complexes in Rochester, MN, Boise, ID and Vancouver, WA. SALE OF PROPERTIES. During the first quarter of Fiscal 1999, IRET sold the 48-unit Park Place apartment complex in Waseca, MN, for $960,000, realizing a gain of $366,000. ACQUISITIONS. The following properties were acquired by IRET during the First Quarter: - Edgewood Vista Alzheimer Facility - Billings, MT $ 965,000 - Edgewood Vista Alzheimer Facility - Sioux Falls, SD 965,000 - Corner Express Convenience Store - Minot, ND 1,200,000 ------------ $ 3,130,000 ------------ Construction of the following property was completed during the First Quarter and is in the rent-up phase: - 67-unit Cottonwood Apartments Phase I - Bismarck, ND $ 4,590,731 ------------ Total major additions to portfolio $ 7,720,731 ============ The following properties are under construction: - 67-unit Cottonwood Apartments Phase II - Bismarck, ND - Great Plains Software home office complex - Fargo, ND FINANCIAL CONDITION. IRET's financial condition continues to be very strong. The July 31, 1998, balance sheet shows cash and marketable securities of $7,187,562, compared to the $6,389,446 on hand three months earlier. Total assets increased to $231,976,590 from the April 30, 1998, total of $224,718,514. Liabilities increased to $151,016,663 versus the April 30, 1998, figure of $148,276,615. Shareholder equity increased to $70,369,518, from $68,152,626 on April 30, 1998. DIVIDENDS. IRET paid a regular dividend of 11 cents per share on July 1, 1998, to shareholders of record at the close of business on June 11, 1998. This was an increase from the 10.7 cents per share dividend paid on April 1, 1998, and was the 109th 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. 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) /s/ Thomas A. Wentz, Sr. Date: September 1, 1998 By___________________________________ Thomas A. Wentz, Sr.,Vice-President EX-27 2
5 3-MOS APR-30-1999 JUL-31-1998 3,086,972 4,100,590 7,443,802 (126,212) 0 14,505,152 240,046,889 (22,575,451) 231,976,590 13,412,872 148,194,202 0 0 77,245,225 (6,912,349) 231,976,590 0 9,102,278 0 5,116,103 133,863 0 2,658,323 1,193,989 0 0 366,017 0 0 1,560,006 .10 0
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