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):  June 28, 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:

☐Written communications pursuant to Rule 425 under the Securities Act

☐Soliciting material pursuant to Rule 14a-12 under the Exchange Act

☐Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act

☐Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02. Results of Operations and Financial Condition.

Investors Real Estate Trust (the “Company”) issued an earnings release on June 28, 2017 announcing financial and operational results for the three and twelve months ended April 30, 2017. A copy of the press release is attached hereto as Exhibit 99.1.

The information in Item 2.02 of this Current Report on Form 8-K, including Exhibit 99.1 furnished pursuant to Item 9.01, shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities under that Section. Furthermore, the information in this Current Report on Form 8-K, including Exhibit 99.1 hereto, shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933.

Item 7.01. Regulation FD Disclosure.

Certain supplemental information regarding the Company’s capital, portfolio and tenant analyses and development activity not included in the earnings release is attached as Exhibit 99.2. The foregoing information is not deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in filings under the Securities Act of 1933.

ITEM 9.01Financial Statements and Exhibits

(d) Exhibits

Exhibit
Number	Description
99.1	Earnings Release issued June 28, 2017, regarding financial and operational results for the three and twelve months ended April  30, 2017
99.2	Supplemental information

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
	By	/s/ Mark O.  Decker, Jr.
		Mark O.  Decker, Jr.
Date:  June 28, 2017		Chief Executive Officer

EX-99.1

Exhibit 99.1

Earnings Release

IRET ANNOUNCES FINANCIAL AND OPERATING RESULTS

FOR THE QUARTER AND FISCAL YEAR ENDED APRIL  30, 2017

(Minot, ND) – June 28, 2017 - IRET (NYSE: IRET) today reported its financial and operating results for the quarter and fiscal year ended April 30, 2017.

Chief Executive Officer Mark Decker commented, “During our fiscal fourth quarter, we continued to make substantial progress on our strategic transformation into a premier, focused multifamily REIT.  Our total portfolio revenue and NOI increased by 12.0% and 14.3%, respectively, driven primarily by our developments which are performing strongly.  Several of our legacy markets were still impacted by weakness in the oil sector and construction activity, however we recorded a year-over-year increase in same store revenue during the quarter, and with quarter-end occupancies still above 94%, we believe we are on track for further improvement.  On the investment front, we are pleased with our recent acquisition of Oxbō Apartments, a brand new Class A multifamily community in St. Paul, Minnesota.  We were able to efficiently redeploy a portion of the proceeds from our recent non-core property sales, and we continue to pursue additional investments which we believe will add the quality of our portfolio and enhance our long term growth profile.  Finally, we added talent to our management team, bringing in executives with substantial public company and multifamily industry expertise.  As we look ahead to fiscal 2018, we are motivated and energized as we continue to implement our strategic initiatives, and drive value for our shareholders.”

Fourth Quarter Fiscal Year 2017 Highlights

· Total revenue was $54.3 million, up 12.0% from the fourth quarter of fiscal year 2016.

· Net income available to common shareholders was $28.0 million compared to $8.1 million for the fourth quarter of fiscal year 2016. The increase was primarily due to an increase in gains on sale of discontinued operations.

· Funds from Operations (“FFO”) was  $10.2 million, or $0.07 per share/unit.

· Excluding one-time items, including $3.2 million in lease termination fee income, a $3.2 million write off of development pursuit costs, $2.9 million in loss on debt extinguishment and $1.2 million in severance costs net of reduced share based compensation, FFO would have been $0.11 per share/unit.

· Disposed of 22 properties, including 19 senior housing properties, 2 medical office properties and 1 multifamily property for a total sales price of $155.4 million with a gain on sale of $37.5 million, netting approximately $126.2 million in proceeds after repayment of debt.

· Subsequent to quarter end, in May, acquired Oxbō Apartments, a 191-unit multifamily property in St. Paul, Minnesota for $61.5 million.

· In April, implemented leadership transformation, promoting Mark O. Decker, Jr. to Chief Executive Officer in addition to President. Also, Jeffrey P. Caira was appointed Chairman of the Board of Trustees, John A. Kirchmann was named Executive Vice President, and Anne Olson was named Executive Vice President, General Counsel and Corporate Secretary. Subsequent to quarter end, in June, Susan J. Picotte was named Vice President of Asset Management.

Fiscal Year 2017 Highlights

· Total revenue was $205.7 million, up 9.2% from fiscal year 2016.

· Net income available to common shareholders was $31.4 million compared to $60.5 million for the prior fiscal year. The decrease was primarily due to net gain on extinguishment of debt in discontinued operations that was

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recognized in the prior period and an increase in non-cash impairment expense attributable to IRET, net of an increase in gains on sale of real estate.

· FFO was $55.2 million, or $0.40 per share/unit.

· Excluding one-time items, including $3.2 million in lease termination fee income, $4.9 million in loss on debt extinguishment, a $3.2 million write off of development pursuit costs, $2.6 million in severance costs and $1.4 million of redemption costs for the Series A Preferred Shares, FFO would have been $0.47 per share/unit.

· Disposed of 38 properties, including 32 senior housing properties, 2 medical office properties, 1 multifamily property, 1 industrial property, 1 retail property and 2 parcels of vacant land for a total sales price of $286.9 million with a gain on sale of $74.9 million, netting approximately $229.7 million in proceeds after repayment of debt.

· During the twelve months ended April 30, 2017, two development project were placed in service, containing a total of 443 units, and representing aggregate development costs of $102.9 million.

· Adjusted the dividend to a level covered by operating cash flow, from an annualized $0.52 to $0.28 per share/unit.

· Entered into a new $250.0 million line of credit providing for improved size, terms and flexibility.

· Redeemed all the outstanding Series A preferred shares on December 2, 2016 for $29.2 million.

· Authorized a one-year share repurchase program of up to $50 million worth of common shares and/or Series B preferred shares.

Financial Results for the Three and Twelve Months Ended April 30, 2017 Compared to the Prior Year Periods

Net income available to common shareholders for the quarter ended April 30, 2017 was $28.0 million compared to $8.1 million for the same period of the prior fiscal year. The increase of $19.9 million was primarily due to an increase in income from discontinued operations (including gains on sale) of $27.0 million, net of a decrease in gain on bargain purchase of $3.4 million and an increase in net income attributable to noncontrolling interests – Operating Partnership of $2.6 million. Net income available to common shareholders for the twelve months ended April 30, 2017 was $31.4 million compared to $60.5 million for the prior fiscal year. The decrease of $29.1 million was primarily due to net gain on extinguishment of debt in discontinued operations that was recognized in the prior period of $29.3 million and an increase in impairment expense attributable to IRET of $42.1 million, net of an increase in gains on sale of real estate (including discontinued operations) of $41.4 million.

FFO for the quarter ended April 30, 2017 was $10.2 million, or $0.07 per share/unit. FFO for the twelve months ended April 30, 2017 was $55.2 million, or $0.40 per share/unit.

The table below highlights FFO and Adjusted Funds from Operations (“AFFO”) results for the most recent five quarters.

	Q4 Ended			Q3 Ended	Q2 Ended		Q1 Ended		Q4 Ended
		4/30/2017		1/31/2017	10/31/2016		7/31/2016		4/30/2016
FFO per share	$	.07	$	.09	$	.12	$	.12	$	.14
AFFO per share	$	.09	$	.10	$	.11	$	.10	$	.11

Occupancy

Occupancy as of April 30, 2017 compared to April 30, 2016 decreased in the multifamily and healthcare segments by 0.7% and 3.1%, respectively, on a same-store basis. Occupancy represents the actual number of units or square footage leased divided by the total number of units or square footage at the end of the period.

	Same-Store Properties				All Properties
Segments	4/30/2017		4/30/2016		4/30/2017		4/30/2016
Multifamily	94.2	%	94.9	%	93.1	%	90.8	%
Healthcare	92.1	%	95.2	%	92.8	%	89.4	%

Operating Results for the Three Months Ended April 30, 2017 Compared to the Prior Year Period

Total revenue increased by $5.8 million, or 12.0%, in the three months ended April 30, 2017 compared to same period one

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year ago. NOI from all properties increased by approximately $4.0 million, or 14.3%, for the quarter ended April 30, 2017 compared to the same period one year ago. Non-Same-Store properties, primarily recent developments which continue to perform strongly, provided for an increase in NOI of $5.0 million while Same-Store NOI decreased by approximately $997,000 for the quarter ended April 30, 2017 compared to the prior year.

Multifamily Results for the Three Months Ended April 30, 2017 Compared to the Prior Year Period

Multifamily (including Non-Same-Store) NOI increased by approximately $1.5 million or 7.8% for the quarter ended April 30, 2017 compared to the same period one year ago.

Same-Store Multifamily Results for the Three Months Ended April 30, 2017 Compared to the Prior Year Period

The Same-Store portfolio showed generally mixed results year over year, as NOI was slightly lower for the non-energy impacted markets. Increased revenues and average rental rates were offset by increases in expenses across most markets.  On a comparative period basis in the non-energy impacted markets, Billings, Bismarck and Rochester experienced the most significant expenses increases due to increases in utility costs in both Billings and Bismarck, maintenance costs in all three markets due to excess snow removal expenses, and increased administrative labor expenses in both Billings and Rochester. Rochester was also affected by increased turnover and janitorial expenses as our properties adjust to new supply in this market.  Bismarck was also affected by stabilizing real estate taxes on our newest asset. Operating margins of Same-Store multifamily NOI to gross revenues decreased by 2.2% year over year to 55.1% for the fourth quarter of fiscal year 2017, as compared to the fourth quarter of fiscal year 2016.

The table below represents Same-Store multifamily performance by region for the fourth quarter ended April 30, 2017 compared to the prior year period.

				FY17Q4		FY17Q4		FY17Q4		4th Quarter Increase (Decrease) From Prior Year’s 4th Quarter
				Weighted		% of		Average						Net		Average		Weighted
	Rentable	Occupancy		Average		Actual		Rental						Operating		Rental		Average
Regions	Units	4/30/2017		Occupancy(1)		NOI		Rate(2)		Revenues		Expenses(4)		Income		Rate		Occupancy
Billings, MT	770	91.2	%	89.6	%	7.7	%	$	985	5.6	%	19.3	%	(2.6)	%	8.4	%	(2.8)	%
Bismarck, ND	977	93.9	%	90.6	%	10.2	%	$	1,023	(1.4)	%	13.6	%	(10.1)	%	(1.9)	%	0.5	%
Grand Forks, ND	1,229	92.5	%	90.2	%	10.4	%	$	916	(3.3)	%	5.3	%	(10.1)	%	0.9	%	(4.2)	%
Minneapolis, MN	558	97.5	%	95.3	%	6.0	%	$	997	7.9	%	0.2	%	14.4	%	9.8	%	(1.9)	%
Omaha, NE	1,370	96.0	%	95.1	%	12.8	%	$	900	3.4	%	2.9	%	3.8	%	4.9	%	(1.5)	%
Rapid City, SD	474	97.5	%	94.5	%	5.0	%	$	939	3.5	%	(3.2)	%	8.4	%	5.8	%	(2.3)	%
Rochester, MN	1,106	93.8	%	92.1	%	13.0	%	$	1,135	1.2	%	23.8	%	(10.7)	%	5.5	%	(4.3)	%
Sioux Falls, SD	969	96.0	%	94.0	%	7.9	%	$	856	1.2	%	(0.8)	%	3.2	%	5.2	%	(4.0)	%
St Cloud, MN	1,187	92.6	%	90.7	%	10.4	%	$	953	4.3	%	(2.9)	%	12.1	%	9.4	%	(5.1)	%
Topeka, KS	1,042	96.6	%	94.5	%	9.7	%	$	811	3.1	%	(0.9)	%	5.8	%	5.8	%	(2.7)	%
Same-Store Subtotals	9,682	94.5	%	92.4	%	93.1	%	$	948	2.0	%	5.6	%	(0.6)	%	4.9	%	(2.9)	%
Minot, ND(3)	640	93.4	%	93.1	%	6.2	%	$	1,053	(6.7)	%	0.4	%	(12.7)	%	(7.8)	%	1.1	%
Williston, ND(3)	189	79.4	%	82.7	%	0.7	%	$	973	(34.4)	%	18.0	%	(72.2)	%	(39.2)	%	4.8	%
Same-Store Totals	10,511	94.2	%	92.3	%	100.0	%	$	955	0.5	%	5.5	%	(3.3)	%	2.6	%	(2.1)	%

(1) Weighted average occupancy is defined as gross potential rent less vacancy losses divided by gross potential rent for the period.

(2) Average rental rate is defined as total rental revenues divided by the weighted average occupied apartment units for the period.

(3) Denotes markets with high exposure to energy-related industries.

(4) Same-Store results by region do not include offsite costs associated with property management or casualty-related amounts, which increased by $135,000 and $123,000, respectively, for FY17 Q4 as compared to FY16 Q4.

Same-Store Multifamily Results for the Twelve Months Ended April 30, 2017 Compared to the Prior Year Period

The Same-Store portfolio showed generally mixed results year over year, as NOI was slightly lower for the non-energy impacted markets and significantly lower when including the energy impacted markets. Increased revenues and average rental rates in the non-energy impacted markets were offset by increases in expenses across most markets. Bismarck, Minneapolis and Rochester experienced the most significant expenses increases due to increases in maintenance snow removal expenses and administrative labor expenses in all three markets, and increased real estate expenses in Bismarck.  Although the Minneapolis market did experience an average rental rate increase of 10.3% resulting in an NOI increase for the comparative period of 8.9%. Operating margins of Same-Store multifamily NOI to gross revenues decreased by 1.7% year over year to 55.6% for fiscal year 2017, as compared to fiscal year 2016.

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The table below represents Same-Store multifamily performance by region for the twelve months ended April 30, 2017 compared to the same period one year ago.

				FY17Q4 YTD		FY17Q4 YTD			FY17Q4 YTD	Increase (Decrease) From Prior Year 12 Month Period
				Weighted		% of			Average					Net		Average		Weighted
	Rentable	Occupancy		Average		Actual			Rental					Operating		Rental		Average
Regions	Units	4/30/2017		Occupancy(1)		NOI			Rate(2)	Revenues		Expenses		Income		Rate		Occupancy
Billings, MT	770	91.2	%	90.6	%	7.8	%	$	955	3.8	%	5.7	%	2.5	%	6.3	%	(2.5)	%
Bismarck, ND	977	93.9	%	89.3	%	10.2	%	$	1,029	(5.5)	%	9.5	%	(14.0)	%	(2.6)	%	(2.9)	%
Grand Forks, ND	1,229	92.5	%	90.8	%	11.1	%	$	917	(4.0)	%	5.1	%	(10.2)	%	(0.1)	%	(3.9)	%
Minneapolis, MN	558	97.5	%	93.7	%	5.6	%	$	972	7.7	%	6.2	%	8.9	%	10.3	%	(2.6)	%
Omaha, NE	1,370	96.0	%	95.5	%	12.7	%	$	885	1.8	%	(1.5)	%	4.5	%	2.7	%	(0.9)	%
Rapid City, SD	474	97.5	%	95.1	%	4.8	%	$	921	2.7	%	(2.2)	%	6.4	%	3.9	%	(1.2)	%
Rochester, MN	1,106	93.8	%	91.9	%	13.2	%	$	1,119	0.7	%	12.2	%	(5.9)	%	5.4	%	(4.7)	%
Sioux Falls, SD	969	96.0	%	94.9	%	7.9	%	$	850	3.0	%	(1.4)	%	7.4	%	5.8	%	(2.8)	%
St Cloud, MN	1,187	92.6	%	90.9	%	9.6	%	$	919	3.3	%	(0.9)	%	8.1	%	7.7	%	(4.4)	%
Topeka, KS	1,042	96.6	%	94.0	%	9.0	%	$	797	3.0	%	0.7	%	4.6	%	5.3	%	(2.3)	%
Same-Store Subtotals	9,682	94.5	%	92.4	%	91.9	%	$	934	1.0	%	3.2	%	(0.7)	%	3.9	%	(2.9)	%
Minot, ND(3)	640	93.4	%	93.0	%	6.6	%	$	1,070	(13.8)	%	(1.3)	%	(22.6)	%	(17.1)	%	3.3	%
Williston, ND(3)	189	79.4	%	81.4	%	1.5	%	$	1,118	(40.1)	%	(12.3)	%	(57.5)	%	(43.7)	%	3.6	%
Same-Store Totals	10,511	94.2	%	92.2	%	100.0	%	$	946	(1.5)	%	2.4	%	(4.3)	%	0.4	%	(1.9)	%

(1) Weighted average occupancy is defined as gross potential rent less vacancy losses divided by gross potential rent for the period.

(2) Average rental rate is defined as total rental revenues divided by the weighted average occupied apartment units for the period.

(3) Denotes markets with high exposure to energy-related industries.

(4) Same-Store results by region do not include offsite costs associated with property management or casualty-related amounts, which increased by $921,000 and $144,000, respectively, for the twelve months ended April 30, 2017 as compared to the twelve months ended April 30, 2016.

Development Projects Placed in Service

During the twelve months ended April 30, 2017, two development projects were placed in service, as detailed in the following table:

			Occupancy		Development Cost
		Rentable Sq Ft or	as of		as of		Anticipated
Project Name and Location	Segment	Number of Units	April 30, 2017		April 30, 2017		Same Store Date
71 France - Edina, MN(1)	Multifamily	241	90.5	%	$	72,362	1Q 2019
Monticello Crossings - Monticello, MN	Multifamily	202	87.6	%		30,516	1Q 2019
					$	102,878

(1) IRET is currently an approximately 52.6% partner in the joint venture entity constructing this project. The anticipated total cost amount given is the total cost to the joint venture entity.

Acquisition Activity

Subsequent to year end, in May, acquired Oxbō Apartments, a 191-unit multifamily property in St. Paul, Minnesota for $61.5 million.

Disposition Activity

During the three months ended April 30, 2017, IRET disposed of 22 properties, including 19 senior housing properties, 2 healthcare properties and 1 multifamily property for a total sales price of $155.4 million with a gain on sale of $37.5 million, netting approximately $126.2 million in proceeds after repayment of debt.

Subsequent to year end, IRET disposed of a retail property for a total sales price of $3.4 million with a gain on sale of approximately $108,000, netting approximately $3.2 million in proceeds.

Liquidity

At April 30, 2017, IRET had $28.8 million cash on hand and its operating partnership had available borrowing capacity of $149.0 million under its $206.0 million line of credit, which matures January 31, 2021.

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Quarterly Distributions

On April 3, 2017, IRET paid a quarterly distribution of $0.07 per common share and unit of IRET Properties.This was IRET’s 184th consecutive distribution. IRET also paid, on March 31, 2017, a quarterly distribution of $0.496875 per share on its Series B preferred shares.

Declaration of Distributions for First Quarter of Fiscal Year 2018

The Board of Trustees has declared quarterly distributions in the aggregate amount of $0.07 per share/unit, payable on July 3, 2017 to common shareholders and unitholders of record at the close of business on June 15, 2017.  Additionally, the Board of Trustees declared a distribution of $0.496875 per share on the 7.95% Series B Cumulative Redeemable Preferred Shares (NYSE: IRET PRB), payable on July 3, 2017 to holders of record at the close of business on June 15, 2017. Series B preferred share distributions are cumulative and payable quarterly in arrears at an annual rate of $1.9875 per share.

Conference Call Information

The conference call to discuss FourthQuarter Earnings is scheduled for Thursday, June 29, 2017 at 10:00 A.M. Eastern Time. Conference call access information is as follows:

USA Toll Free Number: 1-877-509-9785

International Toll Free Number: 1-412-902-4132

Canada Toll Free Number: 1-855-669-9657

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 April 30, 2017, IRET owned interests in 129 properties that were held for investment, consisting of: (1) 87 multifamily properties containing 12,855 units, and (2) 42 commercial properties, including 29 healthcare properties, containing a total of approximately 2.6 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.

Supplemental Information

IRET produced the Supplemental Operating and Financial Data for the Quarter Ended April 30, 2017 (“Supplemental Information”), which is available on IRET’s website at www.iret.com.

Non-GAAP financial measures and other capitalized terms, as used in this earnings release, are defined under the section titled “Definitions” in the Supplemental Information.

Forward-Looking Statements

This earnings release, including the Supplemental Information, contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements, which may be identified by the use of words such as “expects,” “plans,” “estimates,” “anticipates,” “projects,” “intends,” “believes,” “outlook” and similar expressions that do not relate to historical matters, specifically including IRET’s future plans and anticipated operating results, are based on IRET’s expectations, forecasts and assumptions at the time of this earnings release. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results to differ materially from those expressed or implied in such forward-looking statements.

Such risks, uncertainties and other factors that might cause such differences include, but are not limited to: intentions and

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expectations regarding future distributions on common shares and units; changes in operating costs; fluctuations in interest rates; adverse capital and credit market conditions that might affect IRET’s access to various sources of capital and cost of capital; 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; adequate insurance coverage; the effect of government regulation; delays or inability to obtain necessary governmental permits and authorizations; changes in general and local economic and real estate market conditions; changes in demand for IRET properties that may result in lower than expected occupancy and/or rental rates; ability to acquire quality properties in IRET’s targeted markets; ability to successfully dispose of certain assets; competition for tenants from similar competing properties; IRET’s ability to attract and retain skilled personnel; cyber-intrusion; abandonment of development or redevelopment opportunities for which IRET has already incurred costs; delays in completing development, redevelopment and/or lease up of properties and increased costs; IRET’s ability to maintain effective internal controls over financial reporting and disclosure controls and procedures; and those risks and uncertainties detailed from time to time in IRET’s filings with the Securities and Exchange Commission, including IRET’s Form 10-K for the fiscal year ended April 30, 2017 and subsequent quarterly reports on Form 10-Q.

IRET assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events.

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INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)

	(in thousands, except share data)
	April 30, 2017		April 30, 2016
ASSETS
Real estate investments
Property owned	$	1,677,481	$	1,681,471
Less accumulated depreciation		(340,417)		(312,889)
		1,337,064		1,368,582
Development in progress		—		51,681
Unimproved land		18,455		20,939
Total real estate investments		1,355,519		1,441,202
Assets held for sale and assets of discontinued operations		37,708		220,537
Cash and cash equivalents		28,819		66,698
Other investments		—		50
Receivable arising from straight-lining of rents, net of allowance of $340 and $333, respectively		7,822		7,179
Accounts receivable, net of allowance of $210 and $97, respectively		2,600		1,524
Real estate deposits		23,659		—
Prepaid and other assets		3,131		2,937
Intangible assets, net of accumulated amortization of $5,444 and $6,230, respectively		658		1,858
Tax, insurance, and other escrow		5,050		5,450
Property and equipment, net of accumulated depreciation of $1,199 and $1,058, respectively		901		1,011
Goodwill		1,572		1,680
Deferred charges and leasing costs, net of accumulated amortization of $4,275 and $3,719, respectively		7,075		4,896
TOTAL ASSETS	$	1,474,514	$	1,755,022
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
LIABILITIES
Liabilities held for sale and liabilities of discontinued operations	$	30,062	$	77,488
Accounts payable and accrued expenses		40,350		39,727
Revolving line of credit		57,050		17,500
Mortgages payable, net of unamortized loan costs of $3,480 and $4,931, respectively		661,960		812,393
Construction debt and other		41,817		82,130
TOTAL LIABILITIES		831,239		1,029,238
COMMITMENTS AND CONTINGENCIES
REDEEMABLE NONCONTROLLING INTERESTS – CONSOLIDATED REAL ESTATE ENTITIES		7,181		7,522
EQUITY
Investors Real Estate Trust shareholders’ equity
Series A Preferred Shares of Beneficial Interest (Cumulative redeemable preferred shares, no par value, no shares issued and outstanding at April 30, 2017 and 1,150,000 issued and outstanding at April 30, 2016, aggregate liquidation preference of $28,750,000)		—		27,317
Series B Preferred Shares of Beneficial Interest (Cumulative redeemable preferred shares, no par value, 4,600,000 shares issued and outstanding at April 30, 2017 and April 30, 2016, aggregate liquidation preference of $115,000,000)		111,357		111,357
Common Shares of Beneficial Interest (Unlimited authorization, no par value, 121,199,299 shares issued and outstanding at April 30, 2017, and 121,091,249 shares issued and outstanding at April 30, 2016)		916,121		922,084
Accumulated distributions in excess of net income		(466,541)		(442,000)
Total Investors Real Estate Trust shareholders’ equity		560,937		618,758
Noncontrolling interests – Operating Partnership (15,617,216 units at April 30, 2017 and 16,285,239 units at April 30, 2016)		73,233		78,484
Noncontrolling interests – consolidated real estate entities		1,924		21,020
Total equity		636,094		718,262
TOTAL LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY	$	1,474,514	$	1,755,022

vii

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

	(in thousands, except per share data)
		Three Months Ended				Twelve Months Ended
		April 30,				April 30,
		2017		2016		2017		2016
REVENUE
Real estate rentals		$	49,715	$	44,065	$	186,837	$	170,698
Tenant reimbursement			4,629		4,458		18,901		17,622
TOTAL REVENUE			54,344		48,523		205,738		188,320
EXPENSES
Property operating expenses, excluding real estate taxes			15,863		14,907		64,768		58,859
Real estate taxes			6,492		5,617		23,587		20,241
Depreciation and amortization			13,736		13,517		55,009		49,832
Impairment of real estate investments			2,875		2,223		57,028		5,543
General and administrative expenses			3,637		2,951		12,075		11,267
Acquisition and investment related costs			3,224		397		3,276		830
Other expenses			1,091		950		3,796		2,231
TOTAL EXPENSES			46,918		40,562		219,539		148,803
Operating income (loss)			7,426		7,961		(13,801)		39,517
Interest expense			(9,457)		(10,062)		(41,127)		(35,768)
Loss on extinguishment of debt			(1,192)		—		(3,099)		(106)
Interest income			13		26		369		81
Other income			452		31		807		317
(Loss) income before gain on sale of real estate and other investments, gain on bargain purchase and income from discontinued operations			(2,758)		(2,044)		(56,851)		4,041
Gain on sale of real estate and other investments			7,409		8,369		18,701		9,640
Gain on bargain purchase			—		3,424		—		3,424
Income (loss) from continuing operations			4,651		9,749		(38,150)		17,105
Income from discontinued operations			28,989		2,006		68,675		59,497
NET INCOME			33,640		11,755		30,525		76,602
Net income attributable to noncontrolling interests – Operating Partnership			(3,656)		(1,092)		(4,059)		(7,032)
Net loss attributable to noncontrolling interests – consolidated real estate entities			296		340		16,881		2,436
Net income attributable to Investors Real Estate Trust			30,280		11,003		43,347		72,006
Dividends to preferred shareholders			(2,286)		(2,878)		(10,546)		(11,514)
Redemption of Preferred Shares			—		—		(1,435)		—
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS		$	27,994	$	8,125	$	31,366	$	60,492
Earnings (loss) per common share from continuing operations – Investors Real Estate Trust – basic and diluted		$	0.02	$	0.06	$	(0.24)	$	0.06
Earnings per common share from discontinued operations – Investors Real Estate Trust – basic and diluted			0.21		0.01		0.50		0.43
NET INCOME PER COMMON SHARE – BASIC & DILUTED		$	0.23	$	0.07	$	0.26	$	0.49
DIVIDENDS PER COMMON SHARE		$	0.07	$	0.13	$	0.46	$	0.52

viii

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

RECONCILIATION OF NET INCOME ATTRIBUTABLE TO

INVESTORS REAL ESTATE TRUST TO FUNDS FROM OPERATIONS

z

	(inthousands,exceptpershareamounts)
Three Months  Ended April 30,		2017					2016
				Per					Per
			Weighted	Share				Weighted	Share
			Avg Shares	And				Avg Shares	And
	Amount		and Units(1)	Unit(2)			Amount	and Units(1)	Unit(2)
Net income attributable to Investors Real Estate Trust	$	30,280		$		$	11,003		$
Less dividends to preferred shareholders		(2,286)					(2,878)
Net income available to common shareholders		27,994	121,155		0.23		8,125	120,943		0.07
Adjustments:
Noncontrolling interest – Operating Partnership		3,656	15,797				1,092	15,495
Depreciation and amortization		13,222					15,694
Impairment of real estate investments		2,875					2,223
Gains on depreciable property sales attributable to Investors Real Estate Trust		(37,517)					(7,910)
FFO applicable to Common Shares and Units(1)	$	10,230	136,952	$	0.07	$	19,224	136,438	$	0.14

		(in thousands, except per share amounts)
Twelve Months Ended April 30,	2017					2016
				Per					Per
			Weighted	Share				Weighted	Share
			Avg Shares	And				Avg Shares	And
	Amount		and Units(1)	Unit(2)		Amount		and Units(1)	Unit(2)
Net income attributable to Investors Real Estate Trust	$	43,347		$		$	72,006		$
Less dividends to preferred shareholders		(10,546)					(11,514)
Less redemption of preferred shares		(1,435)					—
Net income available to common shareholders		31,366	121,169		0.26		60,492	123,094		0.49
Adjustments:
Noncontrolling interest – Operating Partnership		4,059	16,130				7,032	14,278
Depreciation and amortization		52,564					63,789
Impairment of real estate investments attributable to Investors Real Estate Trust		42,065					5,983
Gains on depreciable property sales attributable to Investors Real Estate Trust		(74,847)					(33,422)
FFO applicable to Common Shares and Units(1)	$	55,207	137,299	$	0.40	$	103,874	137,372	$	0.76

(1)Units of the Operating Partnership are exchangeable for cash, or, at our discretion, for Common Shares on a one-for-one basis.

(2)Net income attributable to Investors Real Estate Trust is calculated on a per Common Share basis. FFO is calculated on a per Common Share and Unit basis.

ix

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

RECONCILATION OF NET OPERATING INCOME TO THE

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

	(in thousands)
Three Months Ended April 30, 2017	Multifamily		Healthcare		All Other		Amounts Not Allocated To Segments(1)		Total
Real estate revenue	$	37,185		14,554		2,605	$	—	$	54,344
Real estate expenses		16,511		3,860		729		1,255		22,355
Net operating income (loss)	$	20,674	$	10,694	$	1,876	$	(1,255)		31,989
Depreciation and amortization										(13,736)
Impairment of real estate investments										(2,875)
General and administrative expenses										(3,637)
Acquisition and investment related costs										(3,224)
Other expenses										(1,091)
Interest expense										(9,457)
Loss on debt extinguishment										(1,192)
Interest and other income										465
Loss before gain on sale of real estate and other investments										(2,758)
Gain on sale of real estate and other investments										7,409
Income from continuing operations										4,651
Income from discontinued operations										28,989
Net income									$	33,640

	(in thousands)
Three Months Ended April 30, 2016	Multifamily		Healthcare		All Other		Amounts Not Allocated To Segments(1)		Total
Real estate revenue	$	34,116	$	11,632	$	2,775	$	—	$	48,523
Real estate expenses		14,935		4,152		638		799		20,524
Net operating income (loss)	$	19,181	$	7,480	$	2,137	$	(799)		27,999
Depreciation and amortization										(13,517)
Impairment of real estate investments										(2,223)
General and administrative expenses										(2,951)
Acquisition and investment related costs										(397)
Other expenses										(950)
Interest expense										(10,062)
Interest and other income										57
Loss before gain on sale of real estate and other investments										(2,044)
Gain on sale of real estate and other investments										8,369
Gain on Bargain Purchase										3,424
Income from continuing operations										9,749
Income from discontinued operations										2,006
Net income									$	11,755

(1) Consists of offsite costs associated with property management and casualty-related amounts.

x

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

RECONCILATION OF NET OPERATING INCOME TO THE

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

	(in thousands)
Twelve Months Ended April 30, 2017	Multifamily		Healthcare		All Other		Amounts Not Allocated To Segments(1)		Total
Real estate revenue	$	144,743	$	49,856	$	11,139		—	$	205,738
Real estate expenses		63,292		16,419		3,024		5,620		88,355
Net operating income (loss)	$	81,451	$	33,437	$	8,115	$	(5,620)		117,383
Depreciation and amortization										(55,009)
Impairment of real estate investments										(57,028)
General and administrative expenses										(12,075)
Acquisition and investment related costs										(3,276)
Other expenses										(3,796)
Interest expense										(41,127)
Loss on debt extinguishment										(3,099)
Interest and other income										1,176
Loss before gain on sale of real estate and other investments and income from discontinued operations										(56,851)
Gain on sale of real estate and other investments										18,701
Loss from continuing operations										(38,150)
Income from discontinued operations										68,675
Net income									$	30,525

	(in thousands)
Twelve Months Ended April 30, 2016	Multifamily		Healthcare		All Other		Amounts Not Allocated To Segments(1)		Total
Real estate revenue	$	131,149	$	45,621	$	11,550	$	—	$	188,320
Real estate expenses		57,130		15,439		2,500		4,031		79,100
Net operating income (loss)	$	74,019	$	30,182	$	9,050	$	(4,031)		109,220
Depreciation and amortization										(49,832)
Impairment of real estate investments										(5,543)
General and administrative expenses										(11,267)
Acquisition and investment related costs										(830)
Other expenses										(2,231)
Interest expense										(35,768)
Loss on debt extinguishment										(106)
Interest and other income										398
Income before gain on sale of real estate and other investments										4,041
Gain on sale of real estate and other investments										9,640
Gain on Bargain Purchase										3,424
Income from continuing operations										17,105
Income from discontinued operations										59,497
Net income									$	76,602

(1) Consists of offsite costs associated with property management and casualty-related amounts.

xi

EX-99.2

Exhibit 99.2

Supplemental Financial and Operating Data

Table of Contents

April  30, 2017

	Page
Company Background	2
Property Cost by Segment and by State	4
Key Financial Data
Condensed Consolidated Balance Sheets	5
Condensed Consolidated Statements of Operations	6
Funds From Operations	7
Adjusted EBITDA	8
Capital Analysis
Debt Analysis	9
Debt Detail	11
Capital Analysis	13
Portfolio Analysis
Net Operating Income Detail	14-17
Tenant Analysis
Multifamily Summary	18
Healthcare Leasing Summary	19-21
10 Largest Commercial Tenants	22
Growth Analysis
Development Summary	23
Definitions	24

1

Company Background

Fourth Quarter Fiscal 2017

We are a real estate investment trust (REIT) focused on the acquisition, development, redevelopment and management of multifamily communities located primarily in select growth markets throughout the Midwest. Our portfolio consists of multifamily and healthcare segments.

As of April  30, 2017, we held for investment a portfolio of 129 properties consisting of 87 multifamily properties, 29 healthcare properties, and 13 other commercial properties.   As of April  30, 2017, our common shares and Series B preferred shares were publicly traded on the New York Stock Exchange (NYSE symbols: IRET and IRETPRB, respectively).

Company Snapshot

(as of April  30, 2017)

Company Headquarters	Minot, North Dakota
Fiscal Year-End	April 30
Reportable Segments	Multifamily and Healthcare
Total Properties Held for Investment	129
Total Units Held for Investment
(multifamily properties)	12,885
Total Square Feet Held for Investment
(healthcare and other commercial properties)	2.6 million
Common Shares Outstanding (thousands)	121,199(1)
Limited Partnership Units Outstanding (thousands)	15,617(1)
Common Share Distribution - Quarter/Annualized	$0.07/$0.28
Annualized Dividend Yield	4.7%
Total Capitalization (see p.12 for detail)	$1.7 billion

(1) Common Shares and Limited Partnership Units outstanding as of June 22, 2017 were 120,622,114 and 15,208,028, respectively.

Investor Information

Board of Trustees

Jeffrey P. Caira	Trustee and Chair
John D. Stewart	Trustee, Vice Chair, and Chair of the Audit Committee
Linda J. Hall	Trustee, Chair of Compensation Committee
Jeffrey L. Miller	Trustee, Chair of the Nominating and Governance Committee and Chair of the Executive Committee
Michael T. Dance	Trustee, Chair of the Investment Committee
Terrance P. Maxwell	Trustee
John A. Schissel	Trustee
Mark O.  Decker, Jr.	Trustee, President and Chief Executive Officer

Management

Mark O. Decker, Jr.	President and Chief Executive Officer; Trustee
John A. Kirchmann	Executive Vice President
Ted E. Holmes	Chief Financial Officer
Anne Olson	Executive Vice President, General Counsel and Secretary
Andrew Martin	Executive Vice President – Asset Management
Nancy B. Andersen	Senior Vice President and Principal Accounting Officer
Matthew M. Volpano	Senior Vice President – Capital Markets

Corporate Headquarters:	Investor Relations Contact:
1400 31st Avenue SW, Suite 60	Stephen Swett
Post Office Box 1988	701-837-7104
Minot, North Dakota 58702-1988	IR@iret.com
Trading Symbol for Common Shares:  IRET
Stock Exchange Listing:  NYSE

2

Common Share Data (NYSE: IRET)

		4th Quarter		3rd Quarter			2nd Quarter			1st Quarter			4th Quarter			3rd Quarter
		Fiscal Year 2017		Fiscal Year 2017			Fiscal Year 2017			Fiscal Year 2017			Fiscal Year 2016			Fiscal Year 2016
High Closing Price	$	6.61		$	7.20		$	6.67		$	6.63		$	7.48		$	8.39
Low Closing Price	$	5.67		$	5.81		$	5.67		$	6.01		$	5.97		$	6.24
Average Closing Price	$	6.09		$	6.65		$	6.21		$	6.35		$	6.71		$	7.35
Closing Price at end of quarter	$	5.91		$	6.44		$	6.07		$	6.62		$	6.02		$	6.52
Common Share Distributions—annualized	$	0.28		$	0.28		$	0.52		$	0.52		$	0.52		$	0.52
Closing Dividend Yield - annualized		4.7	%		4.3	%		8.6	%		7.9	%		8.6	%		8.0	%
Closing common shares outstanding (thousands)		121,199			121,889			121,701			121,528			121,091			121,034
Closing limited partnership units outstanding (thousands)		15,617			16,034			16,229			16,285			16,285			13,864
Closing market value of outstanding common shares, plus imputed closing market value of outstanding limited partnership units (thousands)	$	808,583		$	888,224		$	837,235		$	912,322		$	827,004		$	879,535

This Supplemental Operating and Financial Data contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements, which may be identified by the use of words such as “expects,” “plans,” “estimates,” “anticipates,” “projects,” “intends,” “believes,” “outlook” and similar expressions that do not relate to historical matters, specifically including our future plans, anticipated operating results, anticipated timing of development projects being placed into service, anticipated closings of the remaining senior housing sales, anticipated implementation and results of its value add program, and anticipated timing of properties becoming same-store properties, are based on our expectations, forecasts and assumptions at the time of this earnings release. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results to differ materially from those expressed or implied in such forward-looking statements.

Such risks, uncertainties and other factors that might cause such differences include, but are not limited to: intentions and expectations regarding future distributions on common shares and units; changes in operating costs; fluctuations in interest rates; adverse capital and credit market conditions that might affect our access to various sources of capital and cost of capital; our ability to manage our current debt levels and repay or refinance its indebtedness upon maturity or other payment dates; our ability to maintain financial covenant compliance under its debt agreements; adequate insurance coverage; the effect of government regulation; delays or inability to obtain necessary governmental permits and authorizations; changes in general and local economic and real estate market conditions; changes in demand for our properties that may result in lower than expected occupancy and/or rental rates; ability to acquire quality properties in targeted markets; ability to successfully dispose of certain assets; competition for tenants from similar competing properties; ability to attract and retain skilled personnel; cyber-intrusion; abandonment of development or redevelopment opportunities for which we have already incurred costs; delays in completing development, redevelopment and/or lease up of properties and increased costs; ability to maintain effective internal controls over financial reporting and disclosure controls and procedures; and those risks and uncertainties detailed from time to time in our filings with the Securities and Exchange Commission, including our Form 10-K for the fiscal year ended April 30, 2017 and subsequent quarterly reports on Form 10-Q. We assume no obligation to update or supplement forward-looking statements that become untrue because of subsequent events.

3

Fourth Quarter Fiscal 2017

Property Cost by Segment for Properties Held for Investment 

Percentage of Total Property Cost by State for Properties Held for Investment

4

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)

(in thousands)

	4/30/2017		1/31/2017			10/31/2016	7/31/2016		4/30/2016
ASSETS
Real estate investments
Property owned	$	1,677,481	$	1,685,823	$	1,665,354	$	1,667,442	$	1,681,471
Less accumulated depreciation		(340,417)		(334,875)		(321,790)		(319,087)		(312,889)
		1,337,064		1,350,948		1,343,564		1,348,355		1,368,582
Development in progress		—		11,531		20,921		27,454		51,681
Unimproved land		18,455		19,076		19,069		18,933		20,939
Total real estate investments		1,355,519		1,381,555		1,383,554		1,394,742		1,441,202
Assets held for sale and assets of discontinued operations		37,708		140,226		191,233		215,817		220,537
Cash and cash equivalents		28,819		56,999		68,729		54,438		66,698
Other investments		—		—		—		—		50
Receivable arising from straight-lining of rents, net of allowance		7,822		7,839		7,660		7,683		7,179
Accounts receivable, net of allowance		2,600		3,878		9,815		3,018		1,524
Real estate deposits		23,659		—		1,370		—		—
Prepaid and other assets		3,131		4,060		3,496		2,265		2,937
Intangible assets, net of accumulated amortization		658		731		842		1,172		1,858
Tax, insurance, and other escrow		5,050		5,724		4,786		4,752		5,450
Property and equipment, net of accumulated depreciation		901		915		928		977		1,011
Goodwill		1,572		1,645		1,645		1,680		1,680
Deferred charges and leasing costs, net of accumulated amortization		7,075		5,517		5,261		4,999		4,896
TOTAL ASSETS	$	1,474,514	$	1,609,089	$	1,679,319	$	1,691,543	$	1,755,022
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
LIABILITIES
Liabilities held for sale and liabilities of discontinued operations	$	30,062	$	54,291	$	69,326	$	76,195	$	77,488
Accounts payable and accrued expenses		40,350		41,351		40,382		41,797		39,727
Revolving line of credit		57,050		157,000		47,500		17,500		17,500
Mortgages payable, net of loan costs		661,960		688,424		779,568		812,082		812,393
Construction debt and other		41,817		39,524		82,742		78,481		82,130
TOTAL LIABILITIES		831,239		980,590		1,019,518		1,026,055		1,029,238
REDEEMABLE NONCONTROLLING INTERESTS – CONSOLIDATED REAL ESTATE ENTITIES		7,181		7,300		8,585		7,468		7,522
EQUITY
Investors Real Estate Trust shareholders’ equity
Series A Preferred Shares of Beneficial Interest		—		—		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		916,121		921,735		920,759		922,698		922,084
Accumulated distributions in excess of net income		(466,541)		(486,015)		(489,356)		(482,264)		(442,000)
Total Investors Real Estate Trust shareholders’ equity		560,937		547,077		570,077		579,108		618,758
Noncontrolling interests – Operating Partnership		73,233		72,007		71,994		73,071		78,484
Noncontrolling interests – consolidated real estate entities		1,924		2,115		9,145		5,841		21,020
Total equity		636,094		621,199		651,216		658,020		718,262
TOTAL LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY	$	1,474,514	$	1,609,089	$	1,679,319	$	1,691,543	$	1,755,022

5

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

(in thousands, except per share data)

	Twelve Months Ended						Three Months Ended
OPERATING RESULTS	4/30/2017			4/30/2016			4/30/2017			1/31/2017			10/31/2016			7/31/2016			4/30/2016
Real estate revenue	$	205,738		$	188,320		$	54,344		$	51,174		$	50,609		$	49,611		$	48,523
Real estate expenses		88,355			79,100			22,355			22,793			21,573			21,634			20,524
Net operating income		117,383			109,220			31,989			28,381			29,036			27,977			27,999
Depreciation/amortization		(55,009)			(49,832)			(13,736)			(13,475)			(13,531)			(14,267)			(13,517)
Impairment of real estate investments		(57,028)			(5,543)			(2,875)			—			—			(54,153)			(2,223)
General and administrative expenses		(12,075)			(11,267)			(3,637)			(3,130)			(2,702)			(2,606)			(2,951)
Acquisition and investment related costs		(3,276)			(830)			(3,224)			(5)			(4)			(43)			(397)
Other expenses		(3,796)			(2,231)			(1,091)			(1,037)			(816)			(852)			(950)
Interest expense		(41,127)			(35,768)			(9,457)			(10,680)			(10,626)			(10,364)			(10,062)
Loss on extinguishment of debt		(3,099)			(106)			(1,192)			(1,907)			—			—			—
Interest and other income		1,176			398			465			430			93			188			57
(Loss) income before income (loss) on sale of real estate and other investments and income (loss) from discontinued operations		(56,851)			4,041			(2,758)			(1,423)			1,450			(54,120)			(2,044)
Income (loss) on sale of real estate and other investments		18,701			9,640			7,409			2,437			(103)			8,958			8,369
Gain on bargain purchase		—			3,424			—			—			—			—			3,424
(Loss) income from continuing operations		(38,150)			17,105			4,651			1,014			1,347			(45,162)			9,749
Income from discontinued operations		68,675			59,497			28,989			24,175			10,943			4,568			2,006
Net income (loss)	$	30,525		$	76,602		$	33,640		$	25,189		$	12,290		$	(40,594)		$	11,755
Net (income) loss attributable to noncontrolling interest – Operating Partnership		(4,059)			(7,032)			(3,656)			(2,525)			(1,174)			3,296			(1,092)
Net loss attributable to noncontrolling interests – consolidated real estate entities		16,881			2,436			296			446			484			15,655			340
Net income (loss) attributable to Investors Real Estate Trust		43,347			72,006			30,280			23,110			11,600			(21,643)			11,003
Dividends to preferred shareholders		(10,546)			(11,514)			(2,286)			(2,503)			(2,878)			(2,879)			(2,878)
Redemption of Preferred Shares		(1,435)			—			—			(1,435)			—			—			—
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS	$	31,366		$	60,492		$	27,994		$	19,172		$	8,722		$	(24,522)		$	8,125
Per Share Data
(Loss) earnings per common share from continuing operations – Investors Real Estate Trust – basic & diluted	$	(0.24)		$	0.06		$	0.02		$	(0.02)		$	(0.01)		$	(0.23)		$	0.06
Earnings per common share from discontinued operations – Investors Real Estate Trust – basic & diluted		0.50			0.43			0.21			0.18			0.08			0.03			0.01
Net income (loss) per common share – basic & diluted	$	0.26		$	0.49		$	0.23		$	0.16		$	0.07		$	(0.20)		$	0.07
Percentage of Revenues
Real estate expenses		42.9	%		42.0	%		41.1	%		44.5	%		42.6	%		43.6	%		42.3	%
Depreciation/amortization		26.7	%		26.5	%		25.3	%		26.3	%		26.7	%		28.8	%		27.9	%
General and administrative expenses		5.9	%		6.0	%		6.7	%		6.1	%		5.3	%		5.3	%		6.1	%
Interest		20.0	%		19.0	%		17.4	%		20.9	%		21.0	%		20.9	%		20.7	%
Income from discontinued operations		33.4	%		31.6	%		53.3	%		47.2	%		21.6	%		9.2	%		4.1	%
Net income		14.8	%		40.7	%		61.9	%		49.2	%		24.3	%		(81.8)	%		24.2	%
Ratios
Adjusted EBITDA(1)/Interest expense		2.52	x		2.54	x		2.45	x		2.47	x		2.54	x		2.52	x		2.76	x
Adjusted EBITDA(1)/Interest expense plus preferred distributions		2.05	x		2.10	x		2.00	x		2.04	x		2.05	x		2.03	x		2.23	x

(1) See Definitions on page 24.  Adjusted EBITDA is a non-GAAP measure; see page 8 for  a reconciliation of Adjusted EBITDA to net income.

6

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

FUNDS FROM OPERATIONS(unaudited)

(in thousands, except per share and unit data)

	Twelve Months Ended				Three Months Ended
	4/30/2017		4/30/2016		4/30/2017		1/31/2017		10/31/2016		7/31/2016		4/30/2016
Funds From Operations(1)
Net income (loss) attributable to Investors Real Estate Trust	$	43,347	$	72,006	$	30,280	$	23,110	$	11,600	$	(21,643)	$	11,003
Less dividends to preferred shareholders		(10,546)		(11,514)		(2,286)		(2,503)		(2,878)		(2,879)		(2,878)
Less redemption of preferred shares		(1,435)		—		—		(1,435)		—		—		—
Net income (loss) available to common shareholders		31,366		60,492		27,994		19,172		8,722		(24,522)		8,125
Adjustments:
Noncontrolling interests – Operating Partnership		4,059		7,032		3,656		2,525		1,174		(3,296)		1,092
Depreciation and amortization of real property		52,564		63,789		13,222		12,933		12,971		13,437		15,694
Impairment of real estate investments attributable to Investors Real Estate Trust		42,065		5,983		2,875		—		—		39,189		2,223
(Gain) loss on depreciable property sales	$	(74,847)	$	(33,422)		(37,517)		(21,972)		(6,400)		(8,958)		(7,910)
FFO applicable to common shares and Units		55,207		103,874	$	10,230	$	12,658	$	16,467	$	15,850	$	19,224
FFO per share and unit - basic and diluted(2)	$	0.40	$	0.76	$	0.07	$	0.09	$	0.12	$	0.12	$	0.14
Adjusted funds from operations(1)
FFO applicable to common shares and Units	$	55,207	$	103,874	$	10,230	$	12,658	$	16,467	$	15,850	$	19,224
Adjustments:
Tenant improvements at same-store(3) properties		(2,600)		(1,509)		(526)		(1,212)		(362)		(500)		(778)
Leasing costs at same-store properties(3)		(1,072)		(587)		(72)		(365)		(464)		(170)		(89)
Recurring capital expenditures(1)(3)		(4,402)		(5,553)		(1,189)		(989)		(1,140)		(1,141)		(825)
Straight-line rents		(1,001)		(859)		(174)		(292)		162		(697)		(238)
Non-real estate depreciation		305		354		78		69		69		88		93
Acquisition costs		—		253		—		—		—		—		91
Default interest		—		4,683		—		—		—		—		—
(Gain) loss on extinguishment of debt		4,889		(29,230)		2,910		1,907		72		—		—
Gain on bargain purchase		—		(3,424)		—		—		—		—		(3,424)
Share-based compensation expense		6		2,256		(1,421)		563		603		262		864
Redemption of Preferred Shares		1,435		—		—		1,435		—		—		—
Severance		2,612		—		2,612		—		—		—		—
AFFO applicable to common shares and Units	$	55,379	$	70,258	$	12,448	$	13,774	$	15,407	$	13,692	$	14,918
AFFO per share and unit - basic and diluted	$	0.40	$	0.51	$	0.09	$	0.10	$	0.11	$	0.10	$	0.11
Weighted average shares and units		137,299		137,372		136,952		137,375		137,418		137,402		136,438

(1) See Definitions on page 24.

(2) Excluding income from a lease termination of $3.2 million; loss on extinguishment of debt of $4.9 million; redemption costs of preferred shares of $1.4 million; loss on write off of costs related to developments of $3.3 million; and expense related to stock based compensation and severance pay of $2.6 million, FFO would have been $64.2 million and $0.47 per Common Share and Unit for the twelve months ended April 30, 2017. Excluding gain or loss on extinguishment of debt of $29.2 million; gain on bargain purchase of $3.4 million; and default interest of $4.7 million, FFO would have been $75.9 million and $0.55 per Common Share and Unit for the twelve months ended April 30, 2016. Excluding income from a lease termination of $3.2 million; loss on extinguishment of debt of $2.9 million; loss on write off of costs related to developments of $3.2 million; and expense related to stock based compensation and severance pay of $1.2 million, FFO would have been $14.3 million and $0.11 per Common Share and Unit for the three months ended April 30, 2017. Excluding gain on bargain purchase of $3.4 million, FFO would have been $15.8 million and $0.12 per Common Share and Unit for the three months ended April  30, 2016. 

(3) 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.

7

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

ADJUSTED EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION (ADJUSTED EBITDA) (unaudited)

(in thousands)

	Twelve Months Ended				Three Months Ended
	4/30/2017		4/30/2016		4/30/2017		1/31/2017		10/31/2016		7/31/2016		4/30/2016
Adjusted EBITDA(1)
Net income (loss) attributable to Investors Real Estate Trust	$	43,347	$	72,006	$	30,280	$	23,110	$	11,600	$	(21,643)	$	11,003
Adjustments:
Noncontrolling interests – Operating Partnership		4,059		7,032		3,656		2,525		1,174		(3,296)		1,092
Income before noncontrolling interests – Operating Partnership		47,406		79,038		33,936		25,635		12,774		(24,939)		12,095
Add:
Interest expense		45,942		54,174		10,303		11,880		12,021		11,738		11,475
Loss (gain) loss on extinguishment of debt		4,889		(29,230)		2,910		1,907		72		—		—
Depreciation/amortization related to real estate investments		52,774		63,998		13,280		12,983		13,014		13,497		15,765
Amortization related to real estate revenues(2)		95		146		20		21		27		27		23
Impairment of real estate investments attributable to Investors Real Estate Trust		42,065		5,983		2,875		—		—		39,190		2,223
Less:
Interest income		(2,545)		(2,257)		(557)		(816)		(600)		(572)		(570)
Gain on sale of real estate and other investments		(74,847)		(34,193)		(37,517)		(21,972)		(6,400)		(8,958)		(7,911)
Adjusted EBITDA	$	115,779	$	137,659		25,250		29,638		30,908		29,983		33,100

(1) See Definitions on page 24.

(2) Included in real estate revenue in the Statement of Operations.

8

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

DEBT ANALYSIS

(in thousands)

Debt Maturity Schedule

Annual Expirations

Total Debt

	Future Maturities of Debt(1)
Fiscal Year	Fixed Debt		Variable Debt		Total Debt		Weighted Average(2)			% of Total Debt
2018	$	15,715	$	47,321	$	63,036		3.86	%		8.0	%
2019		20,288		17,927		38,215		4.44	%		4.9	%
2020		105,702		32,503		138,205		5.56	%		17.6	%
2021		102,800		57,050		159,850		4.32	%		20.3	%
2022		123,925		1,694		125,619		5.18	%		16.0	%
2023		28,721		—		28,721		4.13	%		3.7	%
2024		51,204		—		51,204		4.02	%		6.5	%
2025		18,866		—		18,866		4.04	%		2.4	%
2026		55,195		—		55,195		3.74	%		7.0	%
2027		92,000		—		92,000		3.56	%		11.7	%
Thereafter		15,119		—		15,119		4.93	%		1.9	%
Total maturities	$	629,535	$	156,495	$	786,030		4.49	%		100.0	%

(1) Includes mortgages on properties held for sale, construction debt, and line of credit.

(2) Weighted average interest rate of debt that matures in fiscal year.

9

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

DEBT ANALYSIS

(in thousands)

		4/30/2017		1/31/2017			10/31/2016			7/31/2016			4/30/2016
Debt Balances Outstanding(1)
Fixed rate	$	629,535		$	658,224		$	617,694		$	635,251		$	689,346
Variable rate		99,445			81,314			226,891			249,169			196,801
Line of credit		57,050			157,000			47,500			17,500			17,500
Debt total	$	786,030		$	896,538		$	892,085		$	901,920		$	903,647
Weighted Average Interest Rates Secured		4.63	%		4.71	%		4.52	%		4.54	%		4.54	%
Line of Credit Rate		2.74	%		2.55	%		4.75	%		4.75	%		4.75	%

(1) Includes mortgages on properties held for sale.

10

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

DEBT DETAIL AS OF APRIL 30, 2017

(in thousands)

Property	Maturity Date	Fiscal 2018		Fiscal 2019		Fiscal 2020		Fiscal 2021		Thereafter		Total(1)
Multifamily
Cardinal Point - Grand Forks, ND	8/1/2017		23,810		—		—		—		—		23,810
Evergreen II – Isanti, MN	11/1/2017		1,972		—		—		—		—		1,972
Ponds – Sartell, MN	11/1/2017		3,641		—		—		—		—		3,641
Monticello Crossings - Monticello, MN	5/4/2018		—		17,927		—		—		—		17,927
Homestead Gardens II - Rapid City, SD	6/1/2018		—		3,024		—		—		—		3,024
Plaza - Minot, ND	8/1/2018		—		5,068		—		—		—		5,068
Greenfield - Omaha, NE	2/1/2019		—		3,451		—		—		—		3,451
Brooklyn Heights - Minot, ND(2)	4/1/2019		—		573		—		—		—		573
Colton Heights - Minot, ND(2)	4/1/2019		—		323		—		—		—		323
Pines - Minot, ND(2)	4/1/2019		—		92		—		—		—		92
Summit Park - Minot, ND(2)	4/1/2019		—		795		—		—		—		795
Terrace Heights - Minot, ND(2)	4/1/2019		—		133		—		—		—		133
Monticello Village - Monticello, MN	5/28/2019		—		—		2,853		—		—		2,853
Rimrock West - Billings, MT	9/1/2019		—		—		3,160		—		—		3,160
Rocky Meadows - Billings, MT	9/1/2019		—		—		4,899		—		—		4,899
Cimarron Hills - Omaha, NE	10/1/2019		—		—		4,562		—		—		4,562
Cottonwood - Bismarck, ND	10/1/2019		—		—		15,111		—		—		15,111
Forest Park - Grand Forks, ND	10/1/2019		—		—		7,275		—		—		7,275
Renaissance Heights I - Williston, ND	10/1/2019		—		—		23,439		—		—		23,439
Williston Garden - Williston, ND	10/30/2019		—		—		7,316		—		—		7,316
Williston Garden - Williston, ND	10/30/2019		—		—		225		—		—		225
Evergreen - Isanti, MN	11/1/2019		—		—		1,913		—		—		1,913
Pinehurst - Billings, MT	11/1/2019		—		—		121		—		—		121
Northridge - Bismarck, ND	12/1/2019		—		—		5,986		—		—		5,986
Castlerock - Billings, MT	1/1/2020		—		—		6,347		—		—		6,347
Thomasbrook - Lincoln, NE	1/1/2020		—		—		5,687		—		—		5,687
Westwood Park - Bismarck, ND	1/1/2020		—		—		1,879		—		—		1,879
Kirkwood Manor - Bismarck, ND	2/1/2020		—		—		3,145		—		—		3,145
Brookfield Village - Topeka, KS	3/1/2020		—		—		5,025		—		—		5,025
Crown Colony - Topeka, KS	4/1/2020		—		—		7,780		—		—		7,780
Mariposa - Topeka, KS	4/1/2020		—		—		2,816		—		—		2,816
Sherwood - Topeka, KS	4/1/2020		—		—		11,686		—		—		11,686
Deer Ridge	5/1/2020		—		—		—		11,490		—		11,490
Valley Park - Grand Forks, ND	6/1/2020		—		—		—		3,683		—		3,683
Country Meadows II - Billings, MT	10/1/2020		—		—		—		3,355		—		3,355
Olympic Village - Billings, MT	11/1/2020		—		—		—		10,158		—		10,158
Villa West Apartments - Topeka, KS	12/1/2020		—		—		—		11,729		—		11,729
Park Meadows - Waite Park, MN	1/1/2021		—		—		—		8,195		—		8,195
Sunset Trail - Rochester, MN	2/1/2021		—		—		—		7,732		—		7,732
Oxbow Park - Sioux Falls, SD(3)	4/1/2021		—		—		—		3,661		—		3,661
Sierra Vista - Sioux Falls, SD(3)	4/1/2021		—		—		—		1,323		—		1,323
Oakwood Estates - Sioux Falls, SD(3)	4/29/2021		—		—		—		3,749		—		3,749
Summary of Debt due after Fiscal 2021			—		—		—		—		348,529		348,529
Sub-Total Multifamily		$	29,423	$	31,386	$	121,225	$	65,075	$	348,529	$	595,638
Healthcare
Edgewood Vista – Hermantown I, MN(2)	5/28/2017		16,233		—		—		—		—		16,233
High Pointe Health Campus – Lake Elmo, MN	4/1/2018		7,278		—		—		—		—		7,278
Denfeld Clinic - Duluth, MN	8/1/2019		—		—		1,180		—		—		1,180
Gateway Clinic - Sandstone, MN	8/1/2019		—		—		683		—		—		683

11

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

DEBT DETAIL AS OF APRIL 30, 2017

(in thousands)

Property	Maturity Date	Fiscal 2018		Fiscal 2019		Fiscal 2020		Fiscal 2021		Thereafter		Total (1)
Mariner Clinic - Superior, WI	8/1/2019		—		—		1,494		—		—		1,494
Pavilion I - Duluth, MN	8/1/2019		—		—		3,937		—		—		3,937
Pavilion II - Duluth, MN	8/1/2019		—		—		7,245		—		—		7,245
Wells Clinic - Hibbing, MN	8/1/2019		—		—		1,042		—		—		1,042
Edina 6525 France SMC II - Edina, MN	12/1/2020		—		—		—		9,394		—		9,394
Edina 6545 France - 2nd Mtg/Parking Ramp - Edina, MN	12/1/2020		—		—		—		886		—		886
Edina 6545 France SMC I - Edina, MN	12/1/2020		—		—		—		27,445		—		27,445
Summary of Debt due after Fiscal 2021			—		—		—		—		35,824		35,824
Sub-Total Healthcare		$	23,511	$	—	$	15,581	$	37,725	$	35,824	$	112,641
Other
Urbandale 3900 106th Street – Urbandale, IA	7/5/2017		10,102		—		—		—		—		10,102
Plaza 16 – Minot, ND	8/1/2018		—		6,726		—		—		—		6,726
Lexington Commerce Center - Eagan, MN	2/1/2020		—		—		1,399		—		—		1,399
Line of credit	1/31/2021		—		—		—		57,050		—		57,050
Summary of Debt due after Fiscal 2021			—		—		—		—		2,371		2,371
Sub-Total All Other		$	10,102	$	6,726	$	1,399	$	57,050	$	2,371	$	77,648
Total		$	63,036	$	38,112	$	138,205	$	159,850	$	386,724	$	785,927

(1) Totals are principal balances of mortgages, construction debt and line of credit as of April 30, 2017.

(2) Property is classified as held for sale at April 30, 2017.

(3) Loan was paid off subsequent to April 30, 2017.

12

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

CAPITAL ANALYSIS

(in thousands, except per share and unit amounts)

		Three Months Ended
		4/30/2017	1/31/2017		10/31/2016		7/31/2016		4/30/2016
Equity Capitalization
Common shares outstanding		121,199		121,889		121,701		121,528		121,091
Operating partnership (OP) units outstanding		15,617		16,034		16,229		16,285		16,285
Total common shares and OP units outstanding		136,816		137,923		137,930		137,813		137,376
Market price per common share (closing price at end of period)	$	5.91	$	6.44	$	6.07	$	6.62	$	6.02
Equity capitalization-common shares and OP units	$	808,583	$	888,224	$	837,235	$	912,322	$	827,004
Recorded book value of preferred shares	$	111,357	$	111,357	$	138,674	$	138,674	$	138,674
Total equity capitalization	$	919,940	$	999,581	$	975,909	$	1,050,996	$	965,678
Debt Capitalization
Total debt	$	793,827	$	943,751	$	982,486	$	988,031	$	993,323
Total capitalization	$	1,713,767	$	1,943,332	$	1,958,395	$	2,039,027	$	1,959,001
Total debt to total capitalization		0.46:1		0.49:1		0.50:1		0.48:1		0.51:1

	Twelve Months Ended						Three Months Ended
	4/30/2017			4/30/2016			4/30/2017			1/31/2017			10/31/2016			7/31/2016			4/30/2016
Earnings to fixed charges(1)		(2)			1.25	x		1.48	x		1.12	x		1.14	x		(5)			1.80	x
Earnings to combined fixed charges and preferred distributions(1)		(2)			1.05			1.21			(3)			(4)			(5)			1.46	x
Debt service coverage ratio(1)		1.67	x		1.75	x		1.69	x		1.67	x		1.66	x		1.62	x		1.86	x
Distribution Data
Common shares and units outstanding at record date		137,723			134,897			137,723			137,944			137,934			137,376			134,897
Total common distribution paid	$	63,360		$	71,290		$	9,641		$	17,929		$	17,931		$	17,859		$	17,536
Common distribution per share and unit	$	0.40		$	0.52		$	0.07		$	0.07		$	0.13		$	0.13		$	0.13
Payout ratio (FFO per share and unit basis)(1)		100.0	%		68.4	%		100.0	%		77.8	%		108.3	%		108.3	%		92.9	%
Payout ratio (AFFO per share and unit basis)(1)		100.0	%		102.0	%		77.8	%		70.0	%		118.2	%		130.0	%		118.2	%

(1) See Definitions on page 24.

(2) Earnings were inadequate to cover (a) fixed charges and (b) combined fixed charges and preferred distributions by $21.5 million and $32.0 million, respectively. Excluding non-cash asset impairment charges of $57.1 million in the twelve months ended April  30, 2017, the ratio of earnings to fixed charges and of earnings to combined fixed charges and preferred distributions would have been 1.77x and 1.44x, respectively, for the twelve months ended April  30, 2017.

(3) Earnings were inadequate to cover combined fixed charges and preferred distributions by $1.1 million. The ratio of earnings to combined fixed charges and preferred distributions was .92x for the three months ended January 31, 2017.

(4) Earnings were inadequate to cover combined fixed charges and preferred distributions by $1.1 million.  The ratio of earnings to combined fixed charges and preferred distributions was .92x for the three months ended October 31, 2016.

(5) Earnings were inadequate to cover (a) fixed charges and (b) combined fixed charges and preferred distributions by $29.6 million and $32.5 million, respectively. Excluding non-cash asset impairment charges of $54.2 million in the three months ended July 31, 2016, the ratio of earnings to fixed charges and of earnings to combined fixed charges and preferred distributions would have been 3.06x and 2.47x, respectively, for the three months ended July 31, 2016.

13

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

NET OPERATING INCOME DETAIL

(in thousands)

	Three Months Ended April 30, 2017
	Reporting Segments
							Corporate and
	Multifamily		Healthcare		All Other		Other		Total
Real estate rental revenue
Same-store	$	27,792	$	9,355	$	2,139	$	—	$	39,286
Non-same-store		9,393		5,199		466		—		15,058
Total		37,185		14,554		2,605		—		54,344
Real estate expenses(1)
Same-store		12,492		3,417		587		955		17,451
Non-same-store		4,019		443		142		300		4,904
Total		16,511		3,860		729		1,255		22,355
Net operating income (NOI)
Same-store		15,300		5,938		1,552		(955)		21,835
Non-same-store		5,374		4,756		324		(300)		10,154
Net operating income (loss)	$	20,674	$	10,694	$	1,876	$	(1,255)	$	31,989
Reconciliation of NOI to net income (loss) available to common shareholders
Depreciation/amortization	$	(10,030)	$	(2,774)	$	(854)	$	(78)	$	(13,736)
Impairment of real estate investments		(2,119)		—		—		(756)		(2,875)
General and administrative expenses		—		—		—		(3,637)		(3,637)
Acquisition and investment related costs		—		—		—		(3,224)		(3,224)
Other expenses		—		—		—		(1,091)		(1,091)
Interest expense		(7,027)		(1,206)		(313)		(911)		(9,457)
Loss on debt extinguishment		(1,183)		—		(9)		—		(1,192)
Interest and other income		—		—		—		465		465
Income (loss) before gain on sale of real estate and other investments and income from discontinued operations		315		6,714		700		(10,487)		(2,758)
Gain on sale of real estate and other investments		809		6,600		—		—		7,409
Income (loss) from continuing operations		1,124		13,314		700		(10,487)		4,651
Income from discontinued operations		—		28,989		—		—		28,989
Net income (loss)		1,124		42,303		700		(10,487)		33,640
Net income attributable to noncontrolling interests – Operating Partnership		—		—		—		(3,656)		(3,656)
Net loss attributable to noncontrolling interests – consolidated real estate entities		—		—		—		296		296
Net income (loss) attributable to Investors Real Estate Trust		1,124		42,303		700		(13,847)		30,280
Dividends to preferred shareholders		—		—		—		(2,286)		(2,286)
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS	$	1,124	$	42,303	$	700	$	(16,133)	$	27,994

(1) Offsite costs associated with property management and casualty-related amounts are included in the Corporate and Other column.

14

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

NET OPERATING INCOME DETAIL

(in thousands)

	Three Months Ended April 30, 2016
	Reporting Segments
							Corporate and
	Multifamily		Healthcare		All Other		Other		Total
Real estate rental revenue
Same-store	$	27,658	$	9,698	$	2,186	$	—	$	39,542
Non-same-store		6,458		1,934		589		—		8,981
Total		34,116		11,632		2,775		—		48,523
Real estate expenses(1)
Same-store		11,837		3,685		502		686		16,710
Non-same-store		3,098		467		136		113		3,814
Total		14,935		4,152		638		799		20,524
Net operating income (NOI)
Same-store		15,821		6,013		1,684		(686)		22,832
Non-same-store		3,360		1,467		453		(113)		5,167
Net operating income (loss)	$	19,181	$	7,480	$	2,137	$	(799)	$	27,999
Reconciliation of NOI to net income (loss) available to common shareholders
Depreciation/amortization	$	(9,418)	$	(3,109)	$	(913)	$	(77)	$	(13,517)
Impairment of real estate investments		—		(1,898)		—		(325)		(2,223)
General and administrative expenses		—		—		—		(2,951)		(2,951)
Acquisition and investment related costs		—		—		—		(397)		(397)
Other expenses		—		—		—		(950)		(950)
Interest expense		(7,365)		(2,115)		(368)		(214)		(10,062)
Interest and other income		—		—		—		57		57
Income (loss) before gain (loss) on sale of real estate and other investments and (loss) income from discontinued operations		2,398		358		856		(5,656)		(2,044)
(Loss) gain on sale of real estate and other investments		(32)		7,982		420		(1)		8,369
Gain on bargain purchase		3,424		—		—		—		3,424
Income (loss) from continuing operations		5,790		8,340		1,276		(5,657)		9,749
Income from discontinued operations		—		1,863		143		—		2,006
Net income (loss)		5,790		10,203		1,419		(5,657)		11,755
Net income attributable to noncontrolling interests – Operating Partnership		—		—		—		(1,092)		(1,092)
Net loss attributable to noncontrolling interests – consolidated real estate entities		—		—		—		340		340
Net income (loss) attributable to Investors Real Estate Trust		5,790		10,203		1,419		(6,409)		11,003
Dividends to preferred shareholders		—		—		—		(2,878)		(2,878)
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS	$	5,790	$	10,203	$	1,419	$	(9,287)	$	8,125

(1) Offsite costs associated with property management and casualty-related amounts are included in the Corporate and Other column.

15

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

NET OPERATING INCOME DETAIL

(in thousands)

	Twelve Months Ended April 30, 2017
	Reporting Segments
							Corporate and
	Multifamily		Healthcare		All Other		Other		Total
Real estate rental revenue
Same-store	$	110,019	$	38,648	$	8,893	$	—	$	157,560
Non-same-store		34,724		11,208		2,246		—		48,178
Total		144,743		49,856		11,139		—		205,738
Real estate expenses(1)
Same-store		48,896		14,672		2,487		4,553		70,608
Non-same-store		14,396		1,747		537		1,067		17,747
Total		63,292		16,419		3,024		5,620		88,355
Net operating income (NOI)
Same-store		61,123		23,976		6,406		(4,553)		86,952
Non-same-store		20,328		9,461		1,709		(1,067)		30,431
Net operating income (loss)	$	81,451	$	33,437	$	8,115	$	(5,620)	$	117,383
Reconciliation of NOI to net (loss) income available to common shareholders
Depreciation/amortization	$	(39,801)	$	(11,318)	$	(3,600)	$	(290)	$	(55,009)
Impairment of real estate investments		(53,520)		—		—		(3,508)		(57,028)
General and administrative expenses		—		—		—		(12,075)		(12,075)
Acquisition and investment related costs		—		—		—		(3,276)		(3,276)
Other expenses		—		—		—		(3,796)		(3,796)
Interest expense		(30,239)		(7,171)		(1,522)		(2,195)		(41,127)
Loss on extinguishment of debt		(1,432)		(1,455)		(136)		(76)		(3,099)
Interest and other income		—		—		—		1,176		1,176
(Loss) income before (loss) gain on sale of real estate and income from discontinued operations		(43,541)		13,493		2,857		(29,660)		(56,851)
Gain (loss) on sale of real estate and other investments		809		6,498		11,419		(25)		18,701
(Loss) income from continuing operations		(42,732)		19,991		14,276		(29,685)		(38,150)
Income from discontinued operations		—		68,362		313		—		68,675
Net (loss) income		(42,732)		88,353		14,589		(29,685)		30,525
Net income attributable to noncontrolling interests – Operating Partnership		—		—		—		(4,059)		(4,059)
Net loss attributable to noncontrolling interests – consolidated real estate entities		—		—		—		16,881		16,881
Net (loss) income attributable to Investors Real Estate Trust		(42,732)		88,353		14,589		(16,863)		43,347
Dividends to preferred shareholders		—		—		—		(10,546)		(10,546)
Redemption of Preferred Shares		—		—		—		(1,435)		(1,435)
NET (LOSS) INCOME AVAILABLE TO COMMON SHAREHOLDERS	$	(42,732)	$	88,353	$	14,589	$	(28,844)	$	31,366

(1) Offsite costs associated with property management and casualty-related amounts are included in the Corporate and Other column.

16

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

NET OPERATING INCOME DETAIL

(in thousands)

	Twelve Months Ended April 30, 2016
	Reporting Segments
							Corporate and
	Multifamily		Healthcare		All Other		Other		Total
Real estate rental revenue
Same-store	$	111,644	$	38,550	$	9,247	$	—	$	159,441
Non-same-store		19,505		7,071		2,303		—		28,879
Total		131,149		45,621		11,550		—		188,320
Real estate expenses(1)
Same-store		47,746		13,892		2,069		3,672		67,379
Non-same-store		9,384		1,547		431		359		11,721
Total		57,130		15,439		2,500		4,031		79,100
Net operating income (NOI)
Same-store		63,898		24,658		7,178		(3,672)		92,062
Non-same-store		10,121		5,524		1,872		(359)		17,158
Net operating income (loss)	$	74,019	$	30,182	$	9,050	$	(4,031)	$	109,220
Reconciliation of NOI to net income (loss) available to common shareholders
Depreciation/amortization	$	(34,396)	$	(11,496)	$	(3,648)	$	(292)	$	(49,832)
Impairment of real estate investments		(1,873)		(1,898)		—		(1,772)		(5,543)
General and administrative expenses		—		—		—		(11,267)		(11,267)
Acquisition and investment related costs		—		—		—		(830)		(830)
Other expenses		—		—		—		(2,231)		(2,231)
Interest expense		(26,742)		(8,607)		(1,584)		1,165		(35,768)
Loss on debt extinguishment		(93)		—		(13)		—		(106)
Interest and other income		—		—		—		398		398
Income (loss) before gain on sale of real estate and other investments and income from discontinued operations		10,915		8,181		3,805		(18,860)		4,041
(Loss) gain on sale of real estate and other investments		(32)		7,982		1,705		(15)		9,640
Gain on bargain purchase		3,424		—		—		—		3,424
Income (loss) from continuing operations		14,307		16,163		5,510		(18,875)		17,105
Income from discontinued operations		—		8,131		51,366		—		59,497
Net income (loss)		14,307		24,294		56,876		(18,875)		76,602
Net income attributable to noncontrolling interests – Operating Partnership		—		—		—		(7,032)		(7,032)
Net loss attributable to noncontrolling interests – consolidated real estate entities		—		—		—		2,436		2,436
Net income (loss) attributable to Investors Real Estate Trust		14,307		24,294		56,876		(23,471)		72,006
Dividends to preferred shareholders		—		—		—		(11,514)		(11,514)
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS	$	14,307	$	24,294	$	56,876	$	(34,985)	$	60,492

(1) Offsite costs associated with property management and casualty-related amounts are included in the Corporate and Other column.

17

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

MULTIFAMILY SUMMARY(1)

	Three Months Ended
	04/30/17			01/31/17				10/31/16			07/31/16			04/30/16
Number of Units
Same-Store		10,512			10,513			10,513			10,840			9,853
Non-Same-Store		2,693			2,652			2,589			2,196			3,121
All Properties		13,205			13,165			13,102			13,036			12,974
Average Investment Per Unit
Same-Store	$	78,996		$	78,499		$	77,814		$	77,371		$	72,986
Non-Same-Store		164,715			165,367			164,515			196,164			161,851
All Properties	$	96,485		$	95,998		$	94,946		$	97,382		$	94,092
Average Scheduled Rent(2) per Unit
Same-Store	$	906		$	902		$	902		$	888		$	871
Non-Same-Store		1,267			1,289			1,336			1,458			1,244
All Properties	$	980		$	980		$	988		$	984		$	960
Average Revenue per Unit(3)
Same-Store	$	955		$	941		$	950		$	928		$	912
Non-Same-Store		1,334			1,325			1,376			1,462			1,276
All Properties	$	1,032		$	1,019		$	1,035		$	1,020		$	1,000
Occupancy
Same-Store		94.2	%		92.7	%		92.9	%		93.0	%		94.8	%
Non-Same-Store		88.8	%		86.9	%		84.4	%		77.5	%		78.4	%
All Properties		93.1	%		91.5	%		91.2	%		90.4	%		90.8	%
Operating Expenses as a % of Scheduled Rent
Same-Store		46.6	%		47.7	%		44.9	%		47.0	%		44.4	%
Non-Same-Store		42.1	%		39.2	%		36.4	%		31.2	%		36.6	%
All Properties		45.4	%		45.5	%		42.7	%		43.0	%		42.0	%
Capital Expenditures
Total Recurring Capital Expenditures(2) per Unit	$	113		$	94		$	108		$	105		$	84
Total Non-Recurring Capital Expenditures per Unit - Same-Store	$	168		$	201		$	188		$	200		$	85
Revenue Generating Expenditures per Unit(4)	$	8,213		$	10,224		$	13,998		$	8,102			7,632

(1) Previously reported amounts are not revised for discontinued operations or changes in the composition of the same-store properties pool.

(2) See Definitions on page 24.  

(3) Total revenues divided by the weighted average occupied units for the period.

(4) Cost per unit represents the average amount spent on completed and in-progress units during the period and also includes common area redevelopment costs at properties in the value add program.

18

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

HEALTHCARE LEASING SUMMARY (Same-Store Properties)

Healthcare Leasing Activity

The total leasing activity for our same-store healthcare properties, expressed in square feet of leases signed during the period, and the resulting occupancy levels, are as follows:

Three Months Ended April 30, 2017 and 2016

					Total
	Square Feet of		Square Feet of		Square Feet of
	New Leases(1)		Leases Renewed(1)		Leases Executed(1)		Occupancy
	2017	2016	2017	2016	2017	2016	2017		2016
Healthcare	2,082	361	14,037	33,424	16,119	33,785	92.1	%	95.6	%

(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 US GAAP.  Prior periods reflect amounts previously reported and exclude retroactive adjustments for properties reclassified to discontinued operations or non-same-store in the current period.

Twelve Months Ended April 30, 2017 and 2016

					Total
	Square Feet of		Square Feet of		Square Feet of
	New Leases(1)		Leases Renewed(1)		Leases Executed(1)		Occupancy
	2017	2016	2017	2016	2017	2016	2017		2016
Healthcare	20,001	45,446	118,076	156,543	138,077	201,989	92.1	%	95.6	%

(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 US GAAP.  Prior periods reflect amounts previously reported and exclude retroactive adjustments for properties reclassified to discontinued operations or non-same-store in the current period.

Healthcare 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 healthcare properties:

Three Months Ended April 30, 2017 and 2016

									Estimated Tenant				Leasing
	Square Feet of		Average Term		Average				Improvement Cost per				Commissions per
	New Leases(1		in Years		Effective Rent(2)				Square Foot(1)				Square Foot(1)
	2017	2016	2017	2016		2017		2016		2017		2016		2017		2016
Healthcare	2,082	361	6.2	0.5	$	5.62	$	19.28	$	—	$	—	$	5.50	$	—

(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 US GAAP.  Prior periods reflect amounts previously reported and exclude retroactive adjustments for properties reclassified to discontinued operations or non-same-store 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.

19

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

HEALTHCARE LEASING SUMMARY (Same-Store Properties)

Twelve Months Ended April 30, 2017 and 2016

									Estimated Tenant				Leasing
	Square Feet of		Average Term		Average				Improvement Cost per				Commissions per
	New Leases(1)		in Years		Effective Rent(2)				Square Foot(1)				Square Foot(1)
	2017	2016	2017	2016		2017		2016		2017		2016		2017		2016
Healthcare	20,001	45,446	7.6	6.6	$	19.42	$	19.97	$	36.58	$	12.99	$	6.17	$	3.24

(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 US GAAP.  Prior periods reflect amounts previously reported and exclude retroactive adjustments for properties reclassified to discontinued operations or non-same-store 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.

Healthcare Lease Renewals

The following table summarizes our lease renewal activity within our same-store healthcare segment (square feet data in thousands):

Three Months Ended April 30, 2017 and 2016

													Estimated
									Weighted Average				Tenant Improvement				Leasing
	Square Feet of Leases		Percent of Expiring				Average Term		Growth (Decline)				Cost per Square				Commissions per
	Renewed(1)		Leases Renewed(2)				in Years		in Effective Rents(3)				Foot(1)				Square Foot(1)
	2017	2016	2017		2016		2017	2016	2017		2016		2017		2016		2017		2016
Healthcare	14,037	33,424	92.1	%	95.8	%	2.8	4.2	(1.4)	%	5.4	%	$	—	$	10.20	$	1.04	$	1.97

(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 US GAAP.  Prior periods reflect amounts previously reported and exclude retroactive adjustments for properties reclassified to discontinued operations or non-same-store 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. The category of renewed leases does not include leases that have become month-to-month leases, as the month-to-month leases are considered lease amendments.

(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.

Twelve Months Ended April 30, 2017 and 2016

													Estimated
									Weighted Average				Tenant Improvement				Leasing
	Square Feet of Leases		Percent of Expiring				Average Term		Growth (Decline)				Cost per Square				Commissions per
	Renewed(1)		Leases Renewed(2)				in Years		in Effective Rents(3)				Foot(1)				Square Foot(1)
	2017	2016	2017		2016		2017	2016	2017		2016		2017		2016		2017		2016
Healthcare	118,076	156,543	87.8	%	92.2	%	5.5	4.7	1.5	%	5.7	%	$	2.10	$	9.40	$	3.69	$	2.65

(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 US GAAP.  Prior periods reflect amounts previously reported and exclude retroactive adjustments for properties reclassified to discontinued operations or non-same-store 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. The category of renewed leases does not include leases that have become month-to-month leases, as the month-to-month leases are considered lease amendments.

(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.

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Healthcare 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 healthcare properties, including square footage and annualized base rent for expiring leases, as of April 30, 2017. 

			Percentage of Total		Annualized Base				Percentage of Total
		Square Footage of	Healthcare		Rent of Expiring			Average	Healthcare
Fiscal Year of Lease Expiration	# of Leases	Expiring Leases(2)	Leased Square Footage		Leases at Expiration(3)			Rental Rate	Annualized Base Rent
2018(1)	26	96,307	7.8	%	$	1,826,287	$	18.96	6.8	%
2019	16	70,862	5.8	%		1,551,836		21.90	5.8	%
2020	16	93,521	7.6	%		1,922,802		20.56	7.2	%
2021	20	95,575	7.8	%		2,059,840		21.55	7.7	%
2022	16	75,819	6.2	%		1,380,789		18.21	5.2	%
2023	15	65,379	5.3	%		1,239,754		18.96	4.6	%
2024	29	179,460	14.6	%		4,178,414		23.28	15.6	%
2025	5	76,691	6.2	%		1,688,381		22.02	6.3	%
2026	8	84,368	6.9	%		1,509,909		17.90	5.6	%
2027	13	176,652	14.4	%		3,797,245		21.50	14.2	%
Thereafter	14	216,299	17.6	%		5,656,970		26.15	21.1	%
Totals	178	1,230,933	100.0	%	$	26,812,228	$	21.78	100.0	%

(1) Includes month-to-month leases. As of April 30, 2017, month-to-month leases accounted for 11,916 square feet.

(2) Assuming that none of the tenants exercise renewal or termination options, and including leases renewed prior to expiration. Also excludes 1,361 square feet of space occupied by us.

(3) Annualized base rent is monthly scheduled rent as of April 1, 2017, multiplied by 12.

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INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

10 LARGEST COMMERCIAL TENANTS – BASED ON ANNUALIZED BASE RENT(1)

as of April  30, 2017

		Average	% of Total			% of Aggregate
		Remaining	Commercial		Aggregate	Occupied
	Number of	Lease Term	Minimum		Rentable	Square
Tenant	Properties	in Months	Rents		Square Feet	Feet
Fairview Health Services	8	48	11.9	%	239,203	8.8	%
St. Luke’s Hospital of Duluth, Inc.	5	106	8.7	%	186,331	6.8	%
Affiliates of Edgewood Vista	2	56	8.5	%	279,834	10.3	%
PrairieCare Medical LLC	2	120	7.5	%	104,714	3.8	%
Quality Manufacturing Corp	1	69	3.3	%	427,798	15.7	%
Children’s Hospitals & Clinics	3	55	2.7	%	54,378	2.0	%
Allina Health	4	39	2.7	%	53,132	2.0	%
Noran Neurological Clinic	1	76	2.4	%	38,506	1.4	%
Amerada Hess	1	111	2.3	%	50,610	1.9	%
Obstetrics and Gynecology Assc	3	157	2.2	%	39,363	1.4	%
Total/Weighted Average	30	67	52.2	%	1,473,869	54.1	%

(1)Annualized base rent is calculated as monthly base rent (cash basis) per the lease, as of the reporting period, multiplied by 12.

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INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

FISCAL 2017 DEVELOPMENT SUMMARY

as of April  30, 2017

(dollars in thousands)

Development Placed in Service

					Occupancy at		Occupancy		Development
			Date Placed in		Date Placed in		as of		Cost as of
Property	Location	Segment	Service	Number of Units	Service		April 30, 2017		April 30, 2017
71 France(1)	Edina, MN	Multifamily	5/1/16	241	54.0	%	90.5	%	$	72,362
Monticello Crossings	Monticello, MN	Multifamily	3/1/17	202	82.7	%	87.6	%		30,516
									$	102,878

(1) We are currently an approximately 52.6% partner in the joint venture entity constructing this project. The anticipated total cost amount given is the total cost to the joint venture entity.

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Definitions

April  30, 2017

Adjusted EBITDAis 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 adjust FFO for certain unusual non-recurring items that are not representative of our ongoing operating performance. 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. Non-same-store properties, which are composed primarily of recent acquisitions and developments/redevelopments, generally have leasing commission and tenant improvement activity that is contemplated prior to the acquisition or development/redevelopment and which we identify as necessary to bring the property to our operational standards. These costs are not comparable from period to period and are not typical of the normalized recurring activity at same-store properties which maintains the quality of the underlying assets and the revenue stream. The non-same-store leasing commissions and tenant improvements are not representative of our ongoing operating performance and accordingly are not factored into the calculation of AFFO on a consolidated basis.Previously-reported AFFO amounts are not revised for changes in the composition of the same-store properties pool. We believe AFFO is helpful in understanding our operating performance between periods in that it removes certain items that by their nature are not comparable over periods and therefore tend to obscure actual operating performance. AFFO measures the ability to control revenues, expenses and recurring capital expenditures. AFFO should not be considered as an alternative to net income as an indication of financial performance, or as an alternative to cash flows from operations as a measure of liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to make distributions to shareholders. AFFO is a non-GAAP and non-standardized measure, and may be calculated differently by other REITs.

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 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

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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 (except for properties for which significant redevelopment or expansion occurred during either of the periods being compared, and properties sold or classified as held for sale), and, in the case of development or re-development properties, which have achieved a target level of occupancy of 90% for multifamily properties and 85% for office, healthcare, industrial and retail properties.

US GAAP – Accounting principles generally accepted in the United States of America.

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