8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):  March 7, 2017 (March 1, 2017)

INVESTORS REAL ESTATE TRUST

(Exact name of Registrant as specified in its charter)

North Dakota	001-35624	45-0311232
(State or Other Jurisdiction of Incorporation or Organization)	(Commission File Number)	(I.R.S. Employer Identification No.)

1400 31st Avenue SW, Suite 60
Post Office Box 1988
Minot, ND 58702-1988

(Address of principal executive offices) (Zip code)

(701) 837-4738

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed from last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

oWritten communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

oSoliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

oPre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

oPre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.01.Completion of Acquisition or Disposition of Assets.

As previously disclosed in a Current Report on Form 8-K filed with the Securities and Exchange Commission (“SEC”) on August 31, 2016, IRET Properties, a North Dakota Limited Partnership and the operating partnership of Investors Real Estate Trust (“Company”), and various of its subsidiaries (collectively, “IRET”) entered into six separate Agreements for Sale and Purchase of Property (collectively, the “Agreements”) to sell 26 senior housing properties and one multifamily property located in MN, MT, NE, ND, SD and WY (collectively, “Properties”) for approximately $236.0 million in cash, with Edgewood Properties Management LLC, Edgewood Properties, LLP and various of its affiliates and subsidiaries who are tenants that leased and operated the properties (collectively, “Buyer”).

As of March 1, 2017, IRET completed the sales of 23 of the Properties pursuant to four of the Agreements for a combined sales price of $185.6 million. The sales pursuant to the remaining two Agreements are expected to be completed no later than April 28, 2017, although such sales remain subject to customary closing conditions and, accordingly, no assurances can be given as to the timing or successful completion of the sales of these remaining Properties.

The above description of the Agreements is a summary only and is qualified in its entirety by reference to the full text of the Agreements, copies of which were previously filed as Exhibits 10.1 through 10.6 to the Company’s Quarterly Report on Form 10-Q filed with the SEC on December 12, 2016, and are incorporated herein by reference.

In connection with the completion of the sales pursuant to the four Agreements and the assumed closing of the sales pursuant to the remaining two Agreements, the Company is filing, as Exhibit 99.1 hereto, pro forma financial information, which is incorporated herein by reference.

Item 7.01.Regulation FD Disclosure.

On March 7, 2017, the Company issued a press release announcing the status of the closings of the Agreements, as described above under Item 2.01, among other things, which is attached hereto as Exhibit 99.2 (“Press Release”), and is hereby incorporated by reference.

The information set forth in this Item 7.01, including Exhibit 99.2, is being furnished pursuant to Item 7.01 and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section, and it shall not be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or under the Exchange Act, except as expressly provided by specific reference in such a filing.

Item 9.01Financial Statements and Exhibits

(b)Pro forma financial information. The following pro forma financial information reflecting the sales described above is filed herewith as Exhibit 99.1:

·Unaudited Pro Forma Condensed Consolidated Balance Sheet as of October 31, 2016

2

·Notes to Unaudited Pro Forma Financial Information

(d)Exhibits. The following exhibits are being filed or furnished, as applicable, herewith.

Exhibit
Number	Description
99.1	Unaudited Pro Forma Financial Information.
99.2	Press Release dated March 7, 2017.

SIGNATURE

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 hereunto duly authorized.

	INVESTORS REAL ESTATE TRUST
Date: March 7, 2017	By:	/s/ Timothy P. Mihalick
		Timothy P. Mihalick
		Chief Executive Officer

3

EX-99.1

Exhibit 99.1

INVESTORS REAL ESTATE TRUST

PRO FORMA FINANCIAL INFORMATION

(UNAUDITED)

As previously disclosed in a Current Report on Form 8-K filed with the Securities and Exchange Commission (“SEC”) on August 31, 2016, IRET Properties, a North Dakota Limited Partnership and the operating partnership of Investors Real Estate Trust (“Company”), and various of its subsidiaries (collectively, “IRET”) entered into six separate Agreements for Sale and Purchase of Property (collectively, the “Agreements”) to sell 26 senior housing properties and one multifamily property located in MN, MT, NE, ND, SD and WY (collectively, “Properties”) for approximately $236.0 million in cash, with Edgewood Properties Management LLC, Edgewood Properties, LLP and various of its affiliates and subsidiaries who are tenants that leased and operated the properties (collectively, “Buyer”).

As of March 1, 2017, IRET completed the sale of 23 of the Properties pursuant to four of the Agreements for a combined sales price of $185.6 million. The sales pursuant to the remaining two Agreements are expected to be completed no later than April 28, 2017, although such sales remain subject to customary closing conditions and, accordingly, no assurances can be given as to the timing or successful completion of the sales of these remaining Properties.

The accompanying unaudited pro forma condensed consolidated balance sheet is presented as if all the Properties were sold on April 30, 2016.

The operating results of the 26 senior housing Properties are included in discontinued operations for all periods presented in the Company’s audited consolidated statements of operations included in the Company’s Annual Report on Form 10-K for the year ended April 30, 2016 and the Company’s unaudited consolidated financial statements included in the Company’s Quarterly Reports on Form 10-Q for the quarterly periods ended July 31, 2016 and October 31, 2016. Accordingly, the sales of the 26 senior housing Properties have been fully reflected in the Company’s audited and unaudited statements of operations. Although the multifamily Property is not included in discontinued operations in the Company’s previously filed financial statements, its operations are immaterial to the Properties taken as a whole.

In the opinion of the Company’s management, all adjustments necessary to reflect the effects of the transactions described above have been made. The unaudited pro forma financial information is presented for illustrative purposes only and is not necessarily indicative of what the Company’s actual financial condition would have been had the transactions described above occurred on the date indicated, nor does it purport to represent the future results of operations or financial condition of the Company.

The unaudited pro forma consolidated balance sheet and accompanying notes should be read in conjunction with the financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended April 30, 2016 and in the Company’s Quarterly Report on Form 10-Q for the three and six month periods ended October 31, 2016.

F-1

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

OCTOBER 31, 2016

(unaudited)

	(in thousands, except share data)
	Historical (a)			Senior Housing Portfolio (b)			Pro Forma
ASSETS
Real estate investments
Property owned	$	1,665,354		$	—		$	1,665,354
Less accumulated depreciation	(321,790		)	—			(321,790		)
	1,343,564			—			1,343,564
Development in progress	20,921			—			20,921
Unimproved land	19,069			—			19,069
Total real estate investments	1,383,554			—			1,383,554
Assets held for sale and assets of discontinued operations	191,233			(171,201		)	20,032
Cash and cash equivalents	68,729			149,996			218,725
Receivable arising from straight-lining of rents, net of allowance	7,660			—			7,660
Accounts receivable, net of allowance	9,815			—			9,815
Real estate deposits	1,370			23,659			25,029
Prepaid and other assets	3,496			—			3,496
Intangible assets, net of accumulated amortization	842			—			842
Tax, insurance, and other escrow	4,786			—			4,786
Property and equipment, net of accumulated depreciation	928			—			928
Goodwill	1,645			—			1,645
Deferred charges and leasing costs, net of accumulated amortization	5,261			—			5,261
TOTAL ASSETS	$	1, 679,319		$	2,454		1,681,773
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
LIABILITIES
Liabilities held for sale and liabilities of discontinued operations	$	69,326		$	(62,117	)	$	7,209
Accounts payable and accrued expenses	40,382			—			40,382
Revolving line of credit	47,500			—			47,500
Mortgages payable, net of unamortized loan costs	779,568			—			779,568
Construction debt and other	82,742			—			82,742
TOTAL LIABILITIES	1,019,518			(62,117		)	957,401
COMMITMENTS AND CONTINGENCIES
REDEEMABLE NONCONTROLLING INTERESTS — CONSOLIDATED REAL ESTATE ENTITIES	8,585			—			8,585
EQUITY
Investors Real Estate Trust shareholders’ equity
Series A Preferred Shares of Beneficial Interest (Cumulative redeemable preferred shares, no par value, 1,150,000 shares issued and outstanding at October 31, 2016, aggregate liquidation preference of $28,750,000)	27,317			—			27,317
Series B Preferred Shares of Beneficial Interest (Cumulative redeemable preferred shares, no par value, 4,600,000 shares issued and outstanding at October 31, 2016, aggregate liquidation preference of $115,000,000)	111,357			—			111,357
Common Shares of Beneficial Interest (Unlimited authorization, no par value, 121,701,433 shares issued and outstanding at October 31, 2016)	920,759			—			920,759
Accumulated distributions in excess of net income	(489,356		)	64,571			(424,785		)
Total Investors Real Estate Trust shareholders’ equity	570,077			64,571			634,648
Noncontrolling interests – Operating Partnership (16,228,507 units at October 31, 2016)	71,994			—			71,994
Noncontrolling interests – consolidated real estate entities	9,145			—			9,145
Total equity	651,216			64,571			715,787
TOTAL LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY	$	1,679,319		$	2,454		1,681,773

See accompanying notes to unaudited pro forma financial information.

F-2

Notes to Unaudited Pro Forma Condensed Consolidated Balance Sheet

(a) Reflects the unaudited historical consolidated balance sheet of the Company as of October 31, 2016, as contained in the historical consolidated financial statements and notes thereto presented in the Company’s Quarterly Report on Form 10-Q for the three and six month periods ended October 31, 2016.

(b) Represents the pro forma adjustments to the Company’s unaudited consolidated balance sheet as of October 31, 2016 to reflect the sales of all 27 of the Properties as follows:

·The elimination of the assets and liabilities of the Properties as if the sales (including the expected sales of four of the Properties, which are expected to occur no later than April 28, 2017, but as to which no assurances can be given) had all occurred on October 31, 2016.

·The receipt of net proceeds of approximately $161.6 million, which reflects the repayment of mortgage indebtedness secured by the Properties and the payment of transaction costs and the deposit of approximately $23.7 million of net proceeds that are being held by a qualified intermediary in order to facilitate a potential tax-free exchange under Section 1031 of the Internal Revenue Code of 1986, as amended, in the event the Company identifies an acquisition opportunity.

·A gain on sale of approximately $64.6 million from the sales of the Properties.

F-3

EX-99.2

Exhibit 99.2

IRET Announces Closing of Additional Asset Sales and Distributions for Fiscal Fourth Quarter 2017

- Completes Sale of 13 Senior Housing Assets and One Medical Office Property for $86.7 Million -

MINOT, N.D., March 7, 2017 — IRET (NYSE: IRET) today announced that it has completed the sale of 13 senior housing properties, containing 488 units, on February 15, 2017 and March 1, 2017, by closing on an additional two of the six previously announced sale agreements, for a combined total sales price of $66.0 million. After retiring mortgage debt and paying other closing costs, IRET received net cash proceeds of approximately $50.6 million, of which a portion will be used to further reduce leverage and a portion set aside for a possible 1031 exchange.  The properties were sold to wholly-owned subsidiaries of Edgewood Properties, LLLP, which is an affiliate of the tenants that leased and operated the properties prior to the sales.  To date, IRET has now sold 31 of its 34 senior housing properties for a combined sales price of $229.4 million.

Additionally, on March 6, 2017, one of IRET’s subsidiaries completed the sale of a medical office property, consisting of two locations in Minnesota, for a total sales price of $20.7 million, to the current tenant  pursuant to an early exercise of a purchase option contained in the lease. As part of the transaction, the tenant also paid rent through August 31, 2018 and reimbursed the seller the prepayment premium on the existing property loan, collectively approximately $3.4 million.

Chief Executive Officer, Tim Mihalick commented, “We continue to make significant progress in our transition into a pure-play multifamily REIT, having now largely exited the senior housing sector.  The sales of an additional 13 senior housing properties and one medical office property marks another meaningful step in our transformation, and demonstrates our ability to opportunistically recycle capital and strengthen our financial position.”

Additionally, on March 7, 2017, the Board of Trustees declared a regular quarterly distribution of $0.07 per share/unit, payable on April 3, 2017 to common shareholders and unitholders of record at the close of business on March 20, 2017.  This distribution will be the 184th consecutive quarterly distribution paid by IRET since its inception in 1970.  The previous quarterly distributions of $0.13 per share/unit, consisting of a regular quarterly distribution of $0.07 per share/unit and a special distribution of $0.06 per share/unit, were paid on January 17, 2017.

The Board of Trustees also declared a distribution of $0.496875 per share on the 7.95% Series B Cumulative Redeemable Preferred Shares (NYSE: IRET PRB), payable on March 31, 2017 to holders of record at the close of business on March 30, 2017. Series B preferred share distributions are cumulative and payable quarterly in arrears at an annual rate of $1.9875 per share.

About IRET

IRET focuses on the acquisition, development, redevelopment and management of multifamily communities located primarily in select growth markets throughout the Midwest. As of October 31, 2016, IRET owned interests in 130 properties that were held for investment, consisting of: (1) 86 multifamily properties consisting of 12,751 units, and (2) 44 commercial properties, including 30 healthcare properties, containing a total of approximately 2.7 million square feet of leasable space. IRET’s common shares and Series B preferred shares are publicly traded on the New York Stock Exchange (NYSE symbols: IRET and IRETPRB, respectively). IRET’s press releases and supplemental information are available on its website at www.iret.com or by contacting Investor Relations at 701-837-7104.

Forward-Looking Statements

Certain statements in this press release, including statements regarding IRET’s plans and expectations with respect to its strategic transformation and the closing of the remaining sales of senior housing properties pursuant to two existing agreements, 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:  changes in operating costs; the effect of government regulation; the availability of capital; changes in general and local economic and real estate market conditions; IRET’s ability to complete acquisitions and dispositions on attractive terms, or at all; IRET’s ability to manage its current debt levels and repay or refinance its indebtedness upon maturity or other payment dates; IRET’s ability to maintain financial covenant compliance under its debt agreements; fluctuations in interest rates; IRET’s ability to maintain effective internal controls over financial reporting and disclosure controls and procedures; competition; IRET’s ability to attract and retain skilled personnel; and those risks and uncertainties detailed from time to time in IRET’s filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the fiscal year ended April 30, 2016.  We assume no obligation to update or supplement forward-looking statements that become untrue because of subsequent events.

CONTACT INFO

Investor Relations

Stephen Swett
phone: 701-837-7104
email: IR@iret.com